Companies with $27T market value report earnings this week

investmentnews.com:

It’s shaping up to be a pivotal week for global stocks, as companies with a combined $27 trillion market value gear up to report quarterly earnings. As Netflix Inc. and Tesla Inc. showed last week, the pressure is on — to deliver or face a sharp selloff.

Coming into the season, investors were focused on bets that central banks would stop raising interest rates soon, and the US economy could avoid a contraction. Looking past a steady whittling down of near-term earnings estimates, they lifted the MSCI All-Country World Index’s year-to-date gains past 15%. And at almost 20 times forward earnings, the S&P 500 is trading at a premium to its long-term price valuation. 

Now, as the earnings season gets going, investors are looking for companies to deliver.

More than 500 major companies worldwide will reveal how they fared this quarter, and how they expect coming months to shape up. In this busiest week of the season, earnings reports will flow from the likes of Microsoft Corp., Google-parent Alphabet Inc., LVMH, Banco Santander SA, Volkswagen AG, Airbus SE, Sanofi and Samsung Electronics Co Ltd. 

For Morgan Stanley’s Michael Wilson, cost-cutting alone won’t be enough to propel stocks further. Pricey valuations mean “stocks will now need more confirmation of the upturn in growth that consensus expects in the second half,” he told clients in a note. 

Wilson, known for his bearish views on US equities, says investors are becoming harder to impress. S&P 500 earnings have beaten estimates at an above-average rate so far this season, yet only 42% of the stocks had a positive post-earnings reaction, down from 49% in the previous quarter, Morgan Stanley analysis shows. 

“This aligns with our thesis that ‘better-than-feared’ results