The stock market has been performing well in recent months, and it now appears as if new all-time highs for some popular market benchmarks could be within reach. Despite persistent worries about the economy, market participants have started to appreciate that inflation rates are lower than in the past and that consumers are holding up better than many had expected.
In the long run, the stock market's performance depends on companies having strong businesses, and plenty of companies will release their financial results to tell shareholders how they're doing on that front this week.
But two will have the biggest roles in determining the direction of the stock market in August and for the rest of the year. Below, you'll see more about what to expect from Apple (AAPL 0.50%) and Amazon (AMZN 2.50%) when they release their financial results later this week.
Can Apple keep growing?
Shares of Apple have soared so far this year, climbing more than 50% since the beginning of 2023. Yet expectations for the iPhone maker are relatively muted in anticipation of its fiscal third-quarter earnings report on Thursday, Aug. 3, after the market closes.
Apple is likely to have earned $1.19 per share in the period ended June 24, according to the latest consensus forecasts among investors following the tech giant. Revenue projections are for roughly $81.6 billion. Both of those figures would be slight decreases from year-ago levels.
The sluggishness continues trends that Apple has seen earlier this year. In its report for the fiscal second quarter in early May, the company had revenue of $94.8 billion. That figure was almost $2 billion higher than what most investors had anticipated, but it was also down 3% from the same period the previous year. It took record iPhone sales to help support overall revenue and to keep earnings roughly flat compared to year-earlier levels.
Even though some inflationary pressures have eased up, there are ongoing signs that consumers are starting to struggle due in part to higher interest rates from the Federal Reserve. So far, employment trends have remained strong, and that has helped to keep the consumer economy chugging along.
Yet that could change, and Apple investors seem to fear that the fallout from a recession or even a more substantial slowdown could eat into the ability of the company's customers to buy the latest high-end consumer electronics.
Amazon hopes for stronger gains
Meanwhile, Amazon is scheduled to release its earnings report late Thursday afternoon as well. The e-commerce pioneer and cloud infrastructure services provider has also seen its stock rise more than 50% year to date, but shareholders are counting on better growth from Amazon than from Apple.
Investors are looking for Amazon to earn $0.35 per share in the second quarter on sales of $131.5 billion. Both of those figures would be favorable compared to year-ago results, and it could be a nice pickup from tepid first-quarter performance, which showed flat e-commerce product sales in light of macroeconomic pressures. The Amazon Web Services (AWS) division kept doing most of the work in helping the overall business expand.
On the consumer front, investors hope that the company's optional membership-based model will keep panning out. The Prime Day event this summer won't show up in second-quarter results, but the event in early July produced the most sales ever, with more than 375 million items purchased and with savings of more than $2.5 billion.
Amazon's consumer business is quite visible, but most investors will watch to see how much AWS is able to profit from the drive toward innovation in artificial intelligence and cloud computing. If those efforts are doing well, they could help push profits upward for years to come regardless of how consumers are faring.
