U.S. stocks closed lower on Friday, but the Dow Jones Industrial Average and the S&P 500 still scored their second straight positive week after President Donald Trump’s inauguration.
The Dow and S&P 500 advanced 2.1% and 1.7%, respectively, while the tech-heavy Nasdaq climbed 1.6%.
Source: Investing.com
The blockbuster week ahead is expected to be an eventful one filled with several market-moving events, including a key Fed FOMC meeting, an important inflation reading, as well as a flurry of heavyweight tech earnings.
The U.S. central bank is widely expected to leave interest rates unchanged on Wednesday, but Fed Chair Jerome Powell could hit back at rate cut pressure from President Trump when he speaks in the post-meeting press conference.
Markets currently don't expect a rate cut until June, though the May meeting is a close call, as per the Investing.com Fed Monitor Tool.
Besides the Fed, most important on the economic calendar will be Friday’s release of the personal consumption expenditures (PCE) price index, which is the Fed’s preferred inflation measure.
Source: Investing.com
Meanwhile, the earnings season hits full swing, with four of the massive ‘Magnificent Seven’ tech stocks set to report their latest results. Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), and Tesla (NASDAQ:TSLA) all report on Wednesday night, while Apple (NASDAQ:AAPL) is due late Thursday.
These mega-caps will be joined by big names like Intel (NASDAQ:INTC), IBM (NYSE:IBM), ASML (AS:ASML), Boeing (NYSE:BA), United Parcel Service (NYSE:UPS), General Motors (NYSE:GM), Caterpillar (NYSE:CAT), ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX), Visa (NYSE:V), Mastercard (NYSE:MA), Starbucks (NASDAQ:SBUX), AT&T (NYSE:T), Lockheed Martin (NYSE:LMT), and Southwest Airlines (NYSE:LUV).
Regardless of which direction the market goes, below I highlight one stock likely to be in demand and another which could see fresh downside. Remember though, my timeframe is just for the week ahead, Monday, January 27 - Friday, January 31.
Stock To Buy: Meta Platforms
Meta Platforms, the parent company of Facebook, Instagram, Threads, and WhatsApp, stands out as a top buy this week, with its highly anticipated Q4 earnings report set to be a major catalyst for the tech giant.
Meta is scheduled to deliver its update for the fourth quarter after the U.S. market close on Wednesday at 4:05PM ET. CEO Mark Zuckerberg and CFO Susan Li are scheduled to discuss the results during a 5:00PM ET earnings call.
Market participants foresee a sizable swing in META stock after the print drops, according to the options market, with a possible implied move of 7.5% in either direction. Shares gapped down 4.3% after the last earnings report in October.
Source: InvestingPro
Profit estimates have been revised upward 26 times in recent weeks, according to an InvestingPro survey, with just three downward revisions, reflecting growing bullishness around Meta’s earnings potential.
Analysts expect Meta to report a 26% annual jump in adjusted earnings per share (EPS) to $6.73 and a 17% increase in revenue to $47 billion for the December-ended quarter. These impressive figures are driven by strong ad revenue and the company’s innovative efforts to expand its artificial intelligence (AI) capabilities.
The company preannounced that it plans to spend between $60 billion and $65 billion on capital expenditures in 2025 to advance its strategic investments in AI, including new state-of-the-art data centers.
Looking ahead, I believe Meta’s guidance for the current quarter will beat consensus estimates as the company reaps the benefits of its expanding user base, fresh AI initiatives, and new monetization avenues.
Meta’s focus on expanding its AI infrastructure has not only enhanced the effectiveness of its ad-targeting capabilities but also strengthened its product ecosystem, including Facebook, Instagram, Messenger, Reels, Threads, and WhatsApp.
Source: Investing.com
META stock hit a record peak of $652 on Friday before closing at $647.49, above the prior record high close of $636.45 from a day earlier. At current levels, the Menlo Park, California-based company has a market cap of $1.63 trillion, making it the sixth largest company trading on the U.S. stock exchange.
Shares have gained 10.6% to start 2025 after scoring an annual advance of 65% last year.
As InvestingPro points out, Meta boasts a great Financial Health Score of 3.4 out of 5, supported by its impressive earnings and revenue growth prospects, as well as robust gross profit margins and strong return on equity.
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Stock to Sell: Apple
In stark contrast, Apple, the world’s largest consumer electronics company, finds itself in a more precarious position due to weaker-than-expected demand for the iPhone 16 and broader challenges in the consumer electronics market.
Apple’s fiscal first quarter earnings print is scheduled to come out after the market close on Thursday at 4:30PM ET in what will likely be one of the most closely watched reports of the week. A call with CEO Tim Cook and CFO Kevan Parekh is set for 5:00PM ET.
The expected move in the options market is about 4.6% up or down. Shares fell 3.1% after the company’s fiscal Q4 report came out in late October.
Source: InvestingPro
Underscoring several near-term headwinds Apple faces amid the current climate, 11 out of 17 analysts surveyed by InvestingPro lowered their revenue forecasts in the last 90 days.
While the company is expected to post EPS of $2.35 on revenue of $124.09 billion for its most recent quarter, signs of waning iPhone demand—particularly in China—are raising concerns about Apple’s growth trajectory.
Analysts are also worried about Apple’s slower adoption and commercialization of AI, which could weigh on future product innovation.
Adding to the uncertainty, Apple’s guidance for the current quarter is anticipated to disappoint, with Wall Street bracing for muted sales and earnings growth.
Source: Investing.com
AAPL stock closed at $228.78 on Friday, not far from a recent four-month low of $219.38 touched on January 21. Shares, which are testing their 200-day moving average, are down a whopping 11% to start the new year.
At its current valuation, Apple has a market cap of $3.35 trillion, making it the second-most valuable company on the U.S. stock exchange after Nvidia (NASDAQ:NVDA).
It is worth mentioning that despite its relative underperformance, AAPL remains extremely overvalued as per the Fair Value models on InvestingPro, which point to a potential downside of -15.5% to about $188/share.
Furthermore, Apple currently has an InvestingPro Financial Health score of 2.6/5, emphasizing its slowing profit and sales growth. Additionally, the stock trades at high earnings and revenue valuation multiples.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF (SPY), and the Invesco QQQ Trust ETF (QQQ). I am also long on the Invesco Top QQQ ETF (QBIG), Invesco S&P 500 Equal Weight ETF (RSP), and VanEck Vectors Semiconductor ETF (SMH).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies' financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.
