From CNBC · Zev Fima,Kevin Stankiewicz · · 3m
Three stock market tests this week
Capital One, Meta and a wave of earnings reports will show whether companies can justify their spending as inflation stays hot.
In brief
Capital One, Meta and a wave of earnings reports will show whether companies can justify their spending as inflation stays hot. Major earnings from Capital One, Meta and dozens of other companies this week will test whether the market's frosty reception to bank results continues or improves. Originally reported by…
Banks set a tough tone
Top and bottom-line beats from Goldman Sachs were met with selling. State Street and Bank of America got hit even harder despite reporting results.
The backdrop got worse
Rising bond yields, two hotter-than-expected inflation reports, Middle East tensions and questions about AI spending durability have made earnings season harder.
Capital One reports Tuesday
The credit-card issuer reports Tuesday night. CEO Richard Fairbank's commentary on spending across income groups will be especially notable given hot inflation readings.
What Capital One must show
Net interest income fell short last quarter. The company needs sequential expansion this time. Better net charge-offs and a loan reserve release would build confidence.
Capital One's valuation case
At less than nine times forward earnings, Capital One shares look too cheap to give up on despite heavy business investment holding back recent earnings.
Capital One's expected numbers
As of Friday, Capital One is expected to report earnings of five dollars fifty per share on revenue of sixteen point two six billion dollars.
Meta's Muse moment
Meta reports after Wednesday's close. CEO Mark Zuckerberg is riding high from the viral launch of its agentic AI platform assistant, Muse.
What Meta must explain
Management needs to share actual numbers on Muse adoption, daily active users and user type breakdown. But aggressive AI infrastructure spending will counterbalance the optimism.
Meta's spending justification
How well Zuckerberg and CFO Susan Li explain and justify AI spending will impact the stock market reaction. Will they point to current monetization or future revenue potential?
Meta's expected numbers
Meta is expected to report earnings per share of five dollars ninety four on revenue of sixty three point three two billion dollars, according to LSEG.
AI buildout signals
Lam Research and Texas Instruments report Wednesday night. Lam Research makes equipment chipmakers need for semiconductors. Texas Instruments' power management chips for data centers matter most.
Storage and defense watch
Western Digital reports Thursday. RTX, GE Aerospace and Northrop Grumman report Tuesday. Airlines including United, Alaska Air, Southwest and American report throughout the week.
Consumer spending reads
General Motors, Tesla, Netflix, Spotify, Procter and Gamble and American Express all report. Airlines will signal consumer health amid rising gas prices and inflation.
The main idea
Major earnings from Capital One, Meta and dozens of other companies this week will test whether the market's frosty reception to bank results continues or improves.
