A blistering rally in megacap growth and technology shares has buoyed markets this year, and earnings reports in coming weeks could help investors determine if those gains are justified.
Apple and Microsoft, up 27% and 19% this year, respectively, together accounted for nearly half of the S&P 500′s total advance through March, according to S&P Dow Jones Indices. The index is up around 7.5% year-to-date. Alphabet and Microsoft are expected to report their results on April 25, followed by Apple on May 4. Amazon, part of the consumer discretionary sector, is expected to announce results on April 27. Tesla shares fell nearly 10% after missing earnings estimates on April 19.
“Tech corrected very hard last year and it’s already discounted for some sort of recession, given that it has accepted that it has to cut headcount and retrench a little bit,” said Stimpson. “It’s an industry that is accepting its medicine.” “We paid the penalty for holding on to a number of these stocks last year,” Plumb said. “In today’s market growth is something that people think will be a challenge and if you can identify growth you’ll be rewarded.”