Christine Short, vice president of research with Wall Street Horizon, joined Cheddar News to discuss Wednesday's trading session as positive earnings from some tech companies lifted stocks. "This is the safe haven for investors, the barometer of global growth depending on the company we're talking about," she said.

Closing Bell

Make or Break Week as Strong Tech Results Lift Stocks

Joining me now is Christine Shore and V P of Research at Wall Street Horizon, Christine. Always a pleasure to see you. Thanks for joining. Thanks. I clearly in focus, especially these big technology names. You watch these numbers very closely. What are we expecting? Yes. So like I said to you before, this is the make or break week, right? Earning season has been kind of ok. This far, we've seen more companies be on the top and bottom line. But again, that's the lower bar that we came into the season with, but we were waiting for these big earnings because that's really what's been carrying the market so far this year. This is the safe haven for investors. It's a barometer of global growth depending on the company we're talking about. They give you some insight into how consumers are doing and everything and they're so heavily, right? The four companies we see this week are worth a market cap of five trillion. That's 15% of the S and P 500. So you know, the market swings are going to be big for one way to the other. So far, very positive with alphabet and Microsoft yesterday. Alphabet. Not so great. You know, we kind of coming in flat today, Microsoft up almost 8%. Now it's going to be about meta and Amazon for the rest of the week. We're expecting lower ad sales for me. Of course. But we want to see how those layoffs starting in November have trickled down to the bottom line. And what are they expecting or what are they anticipating to do with A I investment? Because that seems to be on investors mind this season? Yeah, I think certainly on consumers mind too. It just seems to be kind of the hot topic out there. Artificial intelligence to say the least. So guidance we know is always so important, right? And even a company like Microsoft can post a better than expected report any sort of way to glean what these estimates say as to whether or not this can be sustained with these cost cutting measures that these technology companies are taking. You're so right. It's all about guidance. Who cares like if they beat or miss that last quarter's news and take example from yesterday. So Microsoft had pretty positive outlook for the second half of the year where as alphabet said, they were uncertain on the outlook. You never want to hear that they're uncertain. Right. That's not, that's not a great thing. And as you can see, investors didn't love hearing that. So certainly when we hear from me today, we're going to be looking for their second half outlook, you know, a possibility of a mild recession towards the end of the year has been on investors mind. That's why we're looking at what the big tech companies say, including Amazon tomorrow is going to be big because that can be directly tied back to consumer sentiment, right? Whereas these other companies, it's a little more of a loose connection, but for sure what Amazon saying about what they see towards the back half of the year, what about an earnings recession in terms of the estimates for the S and P whether or not these earnings are going to grow or contract and what that looks like in the quarters ahead. Yeah, so only 25% through the season through the S and P 500 I think the earnings recession sticks. It's just two quarters of negative year over year growth. We had negative 4.6% growth last quarter right now. We're on track for a little over negative 5%. So again, you don't see investors particularly worried by that. The number always gets better as we go through because as we know a keep those estimates really low, so companies beat the number gets better. So maybe we'll end somewhere, you know, like last season negative 4.5, negative 5%. But that still would be an earnings. But investors seem to be shaking everything off this year, whether it be, you know, the banking prices you were just talking about. I mean, they reacted a little to that but softening economic data. But investors have been resilient in kind of picking and choosing what they focus on. I'm not sure an earnings recession would spook them because it's already priced in because we're already there. Right. Right. Ok. Very good to know in terms of guidance or any other trends that you're picking up from companies reporting this season. What do we know so far about this season? Right now, we track something called the uncertainty ceo uncertainty and our index, it's called the late earnings report index has actually showed that are pretty uncertain right now. Coming into the season, they're the most uncertain. They've been in two years. So that's been a little alarming to me. It's something we track called corporate body language and the way that they move their earning states, a lot of earning states have been moved back this year this quarter. And you never want to see that because it shows not necessarily they're expecting bad news. Although academic research shows if you delay an earnings state usually correlates pretty highly with bad news. So that's one thing that we're keeping track on is that they're getting a little unsure of what to expect and how they're going to move with the coming head winds. And so that's one thing I'd like to look at, you know, the Vix has been relatively low consumer sentiment has held up, but just looking at what ceos are saying and right now that's at a, you know, highest level in two years. So I'll be looking at, you know, commentary to see if they get a little more certain as we go through this earning season. So make the connection for us right, for our viewers wondering how earnings traditionally historically impact the stock market. What is that relationship like? Even if this earnings recession now is already priced in the market? Look, you want to invest in companies that are growing and when you see companies falling more than you expected that, you know, alarms investors and they want to look elsewhere, especially this year. There's been this return to growth last year was all about value. And so can we continue going into those growth names that are led by, by the big tech companies? And so that's the connection you want to invest in strong good companies that have great fundamental both on the top and bottom line and be aware of some of the nuances there and the head ones that they have coming. And it's also more helpful when companies are very transparent on their calls. And they say, you know, yes, we understand these headwinds are coming here is our plan to resolve them. Here's how we're going to continue bottom line growth. All right, Christine short with everything we need to know about this earnings season. Christine is the V P of research at Wall Street Horizon. Thank you all so much.