The S&P 500(SNPINDEX: ^GSPC) has declined 10% from its high as tariffs imposed by the Trump administration have rattled financial markets. Investors will receive important data this week that could either alleviate or intensify concerns surrounding the trade war.
The Labor Department will release jobs, payroll, and unemployment numbers, and the Commerce Department will announce first-quarter GDP and consumer spending data for March. Also, four big technology companies will report financial results: Meta Platforms(NASDAQ: META), Microsoft(NASDAQ: MSFT), Apple(NASDAQ: AAPL), and Amazon(NASDAQ: AMZN).
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Here's what investors should know about those events.
Jobs numbers and GDP data will provide insight into the strength of the economy
The Labor Department will release its jobs report for March after the market opens on Tuesday, April 29. And it will release its employment situation report for April, including non-farm payrolls and unemployment data, before the market opens on Friday, May 1.
Job openings are forecast to decrease 68,000 to 7.5 million. The report measures demand for labor, so a smaller increase in job openings could send the stock market lower because it would suggest businesses need fewer workers, which itself would portend a slowdown in economic activity.
Non-farm payrolls soared 228,000 in March as hiring activity remained unexpectedly strong. The economy is forecast to add 130,000 jobs in April, so a smaller number could worry investors and cause stocks to fall because it would suggest businesses are more hesitant to add workers.
The unemployment rate increased to 4.2% in March. That was the highest reading since November, but well below the 10-year average of 4.65%. The unemployment rate is forecast to stay at 4.2% in April, so a higher reading could cause the stock market to fall.
The Commerce Department will announce first-quarter gross domestic product (GDP) before the market opens on Wednesday, April 30. And it will publish consumer spending data for March shortly after the market opens on the same day.
Gross domestic product soared 2.4% in Q4 2024, but growth is forecast to slow to 0.4% in Q1 2025. That would be the lowest reading in three years, and it would provide tangible proof that tariffs imposed by the Trump administration rapidly upended what had been a strong economy a few months earlier.
Consumer spending is forecast to increase 0.4% in March. A number below the consensus estimate could cause stocks to fall because consumer spending is the largest contributor to economic growth. But a higher reading could allay concerns about the impact of tariffs, at least temporarily.
The reports above have knock-on effects with the Federal Reserve. The market anticipates four quarter-point interest rate cuts in the remaining months of the year. But signs of economic strength, while ostensibly good, could lead to fewer interest rate cuts. The market would probably find that disappointing, meaning stocks could fall in response to weak or overly strong economic data.
Image source: Getty Images.
Big tech financial results will provide insight into how companies are coping with tariffs
Four big tech companies are scheduled to announce financial results this week. Reports from Meta Platforms and Microsoft will be available after the market closes on Wednesday, April 30. And reports from Amazon and Apple will be available after the market closes on Thursday, May 1.
Meta Platforms: Wall Street expects sales to increase 14% to $41.4 billion, while earnings increase 12% to $5.28 per diluted share. The most important talking point for management is how artificial intelligence (AI) is impacting social media engagement and ad spending. But investors should also listen for commentary concerning the ongoing antitrust lawsuit alleging Meta's 2012 acquisition of Instagram was illegal.
Microsoft: Wall Street expects revenue to increase 11% to $68.4 billion, while earnings increase 10% to $3.22 per diluted share. Microsoft has reportedly pulled back from several data center projects in recent months, so investors should look for information concerning AI monetization. Does the company see strong demand for AI software products and cloud services?
Amazon: Wall Street expects revenue to increase 8% to $154.9 billion, while earnings increase 39% to $1.36 per diluted share. Most merchants on the marketplace have some exposure to Chinese goods, so management must address how tariffs could impact sales. Other important talking points include demand for AI cloud services and spending on AI infrastructure.
Apple: Wall Street expects sales to increase 4% to $94.1 billion, while earnings increase 5% to $1.61 per diluted share. More than half of revenue comes from iPhones, the vast majority of which (about 90%) are assembled in China. The company is moving some capacity to India to avoid the heaviest tariffs, but management must discuss how the trade war could hurt the business. Another key talking point is interest in AI features.
For every company, readers should note whether management provides guidance. Any lack of visibility would suggest that shifting U.S. trade policies have hurt business leaders' ability to predict demand and make capital allocation decisions, which could make investors nervous. That anxiety could easily turn into a sell-off across the broader market because those four companies account for 19% of the S&P 500.
Alternatively, strong financial results and encouraging commentary from management concerning the trade war could easily spark a stock market rally.
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