Stocks fluctuated Monday, ending the day on a lower note. Meanwhile, Ethereum lead losses among major cryptos, falling 1.42% while the market fell 0.2%.
Twitter (TWTR) fought back against Elon Musk’s takeover bid, by enacting a limited duration shareholder rights plan, which is also known as a ‘poison pill’ on Friday. The limited duration shareholder rights plan is a strategy that discourages buying more than 15% of the company by allowing shareholders to purchase discounted shares. The plan is set to expire on April 14, 2023.
Earnings reports will dominate the narrative this week, as well as an update on the housing market.
Housing Update
The investors will get an update on the housing market this week from the release of the Housing Starts and Building Permits report Tuesday morning and the Existing Home Sales report Wednesday morning.Housing starts are expected to have cooled off in March to an annualized rate of 1.75 million homes from 1.769 million in the prior report, while building permits are expected to slow to an annualized rate of 1.84 million homes from 1.859 million.
In the previous report, single-family units had an encouraging rise of 5.7% on the housing starts side that was tempered by a half-percent decline in permits for single units. Single unit permits are a leading indicator for future housing starts.According to Odeta Kushi, Deputy Chief Economist at First American, the decline in permits for single-unit housing could mean builders are growing “concerned about affordability challenges ahead as rates continue to rise.” This mirrors the declining expectations by consumers.
Starts and permits aside, Existing Home Sales slowed to its slowest rate in six months during the last report as rising mortgage rates and rising home prices weighed on demand.
Earnings
Throughout the week, there will be a plethora of earnings reports. Banks will continue to report en masse this week after the industry kicked-off earnings season last week. Also up to bat this week are the struggling Covid-favorites and some leaders in the transition to green energy.Struggling Pandemic Picks
Many pandemic favorites, particularly subscription and social media stocks, are still burnt out after flying too close to the sun during the pandemic.Snapchat (SNAP) and Netflix (NFLX) are ripe examples of this. The pair are off of 52-week highs by 60.5% and 51.99% respectively, with both stocks only slightly off of their recent lows.
The pair have faced subscriber growth slowdowns as they continue to fail to find a footing after surging during the pandemic. This time around, investors will be looking for signs that recent initiatives by the pair are helping to reclaim some lost growth.
From acquiring neurotech company NextMind and making several augmented reality-based additions to Snapchat, such as a lens that teaches the American Sign Language alphabet, SNAP’s efforts to reclaim growth haven’t gone unnoticed. But whether they have been able to drive advertising and user growth and engagement is another.
Meanwhile, Netflix faced a serious trimming by analysts of their price targets as the streaming service’s exit from Russia following the invasion of Ukraine dampened expectations for the quarter. Cowen analysts lowered estimates for net adds to 1.45 million, sharply below company guidance for 2.5 million net adds.Further, Netflix’s subscription price increase in the U.S. and Canada was meant with mixed reviews by analysts as that is expected to lose the company some subscriptions. However, the flip-side of the argument is that, through the increased revenues, Netflix may be able to boost its subscriber base in other, less saturated countries through better and more content for those regions.
Ultimately, Netflix’s reaction will likely come down to subscriber growth in this quarter and what its guidance, if provided, looks like. The question becomes, is it better than feared or worse than imagined?
Enviro-Picks
While Tesla (TSLA) and NextEra Energy (NEE) both enjoyed strong pandemic rides and they both remain much closer to highs set than the two above. Tesla is 19% off highs and NextEra Energy is 13% off of highs.Despite Tesla delivering slightly fewer cars in the first three months of the year compared to the quarter before (by less than 500), Tesla is coming into this report in pretty good standing as the company finally started delivering EVs from its Gigafactory in Austin, Texas.
Wedbush analyst Dan Ives believes the company will be able to scale to about 2 million vehicles per year with the help of Giga Austin (from about 1 million).In the case of the clean and renewable energy company NextEra, the rate base settlement approved by the Florida Public Service Commission is expected to have a positive impact on the company’s performance. This is expected to boost NEE’s Florida Power and Light arm, while its investment in Gulf Power is expected to help lower the company’s margins.
Economic Events this Week
Tuesday- 08:30 ET - Building Permits
- 08:30 ET - Housing Starts
Wednesday
- 10:00 ET - Existing Home Sales
- 10:30 ET - EIA Crude Oil Inventories
Thursday
- 08:30 ET - Continuing Claims
- 08:30 ET - Initial Claims
Friday
- 09:45 ET - IHS Markit Manufacturing PMI - Prel
- 09:45 ET - IHS Markit Services PMI - Prel
Earnings Reports This Week
Monday:
After the bell: JBHT, PNFP, FNB, ELS, HOPETuesday:
Before the bell: JNJ, LMT, TRV, TFC, MAN, HAL, FITB, CFG, HAS, PLD, SBNY, CBSHAfter the bell: IBM, NFLX, OMC, FHN, IBKR, WTFC, LRN, PACW, HWC, MRTN
Wednesday:
Before the bell: ANTM, PG, ABT, LAD, BKR, RCI, ASML, MTB, NDAQ, CMA, HCSG, GATXAfter the bell: TSLA, UAL, STLD, THC, LRCX, KMI, AA, CVNA, CSX, LSTR, RHI, KNX, CCI, EFX, GL, LVS, VMI
Thursday:
Before the bell: T, DOW, NUE, AAL, DHR, PM, ABB, AN, FCX, UNP, MMC, NEE, GPC, TSCO, DGX, BX, NVR, DOV, KEY, SON, ALK, XRX, HBAN, WSO, POOL, SNA, PNRAfter the bell: PPG, FE, UFPI, SIVB, ISRG, SNAP, WAL, SAM, HTH, XM, BJRI, OZK, ASB