Wall Street Prepares for Earnings Reports as December Kicks Off

Investors are gearing up for a significant week on Wall Street as several major companies, including Salesforce and C3.ai, prepare to report their earnings. This comes after a strong holiday shopping season, highlighted by record-breaking online sales on Black Friday, which reached $11.8 billion, a 9.1% increase from last year. The focus will be on how these companies are navigating growth and the impact of artificial intelligence (AI) on their performance.

Salesforce, a leader in customer relationship management, will announce its earnings on December 6, 2023. Analysts expect the company to report earnings per share (EPS) of $2.86 on revenues of $10.27 billion. According to Seeking Alpha analyst Luca Socci, the market is closely watching whether Salesforce can achieve growth that breaks through a psychological barrier that investors have set. Concerns linger regarding the company’s competitive edge and the long-term benefits of its Agentforce platform amidst the AI revolution.

The earnings calendar is filled with notable companies reporting this week. On December 4, MongoDB (MDB) will share its results, followed by CrowdStrike (CRWD), Marvell (MRVL), and GitLab (GTLB) on December 5. The next day, Snowflake (SNOW), Dollar Tree (DLTR), and C3.ai will report alongside Salesforce. The week concludes with earnings from Kroger (KR), Ulta Beauty (ULTA), Hewlett Packard Enterprise (HPE), and Dollar General (DG) on December 7.

As the earnings reports unfold, the economic backdrop remains in focus. Federal Reserve Chairman Jay Powell is set to speak at a panel discussion at Stanford, although the Fed is currently in its blackout period, which limits public comments on monetary policy. The markets are anticipating an 85% chance that the Federal Open Market Committee (FOMC) will implement a quarter-point rate cut on December 10. This expectation is the highest since Powell’s last press conference, which leaned towards a hawkish stance.

On the consumer front, Adobe reported that online shopping surged on Black Friday, with spending hitting $11.8 billion. During peak hours from 10 a.m. to 2 p.m., shoppers spent an average of $12.5 million every minute. Mobile devices accounted for a substantial 55.2% of these sales, underscoring the ongoing shift towards mobile commerce. Additionally, traffic to U.S. retail websites, driven by AI tools, increased by 805% year-over-year, as consumers utilized generative AI for product research and deal hunting.

As the week progresses, the growing influence of AI will be hard to overlook, especially with ChatGPT celebrating its third anniversary. Since its launch, it has transformed the landscape of AI interaction, gaining 1 million users within just five days and prompting a surge in demand for graphics processing units (GPUs). The evolution of OpenAI has been remarkable, with private valuations soaring to approximately $90 billion as the competition in AI intensifies.

In other news, Swiss voters have overwhelmingly rejected a proposal to impose a 50% inheritance tax on estates exceeding SFr50 million. More than 80% of voters opposed the measure, which was intended to fund climate initiatives, citing concerns that it would harm Switzerland’s reputation as a financial hub.

For income investors, several companies are going ex-dividend this week, presenting opportunities for dividends. Lockheed Martin (LMT) and McDonald’s (MCD) will go ex-dividend on December 4, with payouts scheduled for December 30 and December 15, respectively. Other companies, including Goldman Sachs (GS), Home Depot (HD), and Qualcomm (QCOM), will also go ex-dividend, providing additional options for dividend-seeking investors.

As the week unfolds, the interplay of robust consumer spending, corporate earnings, and monetary policy will be vital in shaping market sentiment. Investors will be watching closely to gauge how these factors influence the broader economic landscape heading into the new year.