(Bloomberg) -- US stocks are poised for a rocky start to the trading week, after Friday’s unexpectedly strong jobs report could signal further rate increases from the Federal Reserve, and quell expectations that the central bank would stop hikes or even move to cuts this year. While the labor market remains strong, the US tech megacaps delivered disappointing results this week, with Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN) all providing weaker guidance, and Dell joining the list of companies cutting their workforce. Softer consumer demand and ad spending flagged by these companies may portend tepid results for game developers and Walt Disney (NYSE:DIS) reporting this week, and while individual companies could emerge as winners with effective cost-cutting measures and pricing adjustments, shares of Tyson Foods (NYSE:TSN) slumped premarket, as falling meat prices squeezed first quarter earnings.
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Highlights to look for next week:
Monday: Take Two (NASDAQ:TTWO) is due after market. While shares of the New York-based game developer have been sensitive to recent delays in video game titles and weak outlooks from peers like Ubisoft and Electronic Arts (NASDAQ:EA), analysts at MoffettNathanson and Truist Securities have been upbeat about the company’s upcoming content pipeline, headed by the next Grand Theft Auto release, being a catalyst for long-term expansion. Investors may look for commentary on how it might bring its mobile business back to growth after it cut bookings guidance in November on muted spending in the broader sector.
Activision Blizzard (NASDAQ:ATVI US) will also report after the close. Focus remains on whether its deal with Microsoft (NASDAQ:MSFT) will go through given antitrust probes and the need for approval by multiple jurisdictions including the US and Europe, as well as the UK’s Competition and Markets Authority, due to issue provisional findings in the coming days. For the reporting period, the developer behind popular franchises like Call of Duty, Diablo and World of Warcraft will report more than 20% growth in EPS and bookings after three quarters of y/y contraction, suggesting it may have moved past the pandemic-related slowdown. The earnings impact from the recent expiration of its agreements with NetEase (NASDAQ:NTES) to publish its titles in China may be limited, as Wedbush analysts expect Tencent (HK:0700) to emerge as a replacement in the coming months; implied FY EPS could take a 20-cent hit if deals are not replaced for a full year. The firm also reached a $35 million settlement with the SEC on Friday, to resolve allegations it improperly handled and disclosed workplace misconduct complaints. The company will not hold a call or provide detailed guidance due to the pending acquisition.
Tuesday: Chipotle (NYSE:CMG is due after the bell. While US employers in January have made job cut announcements at more than twice the level in December, the Tex-Mex fast food chain said it is hiring more than 15,000 workers in the country, a sign that it is positioned for growth as it seeks to double its footprint in North America. Fourth-quarter same-store sales may have risen mid- to high-single digits and restaurant-level margin is expected to remain slightly above 25% based on company guidance due to price hikes. Management has expressed optimism that “traffic could recover in 2023 from modestly negative levels” seen in the second half of last year, driven in part by improved operations, throughput and stabilizing delivery comparisons, according to Raymond James analysts who held a call with executives in December.
Wednesday: Walt Disney reports after the closing bell. Bob Iger’s return as CEO and the proxy battle with activist investor Nelson Peltz have set the stage for what could be an action-packed earnings day. For the fiscal first quarter, the world’s largest entertainment company is projected to post its biggest year-on-year adjusted EPS decline in two years, alongside a small Disney+ subscriber loss, according to Bloomberg consensus.Wells Fargo analysts expect management to offer details on cost-cutting measures that were announced in the last report, adding it’s possible for Disney to withdraw subscriber targets for 2024 in favor of content creation and profitability. The company is also said to be exploring more licensing of its film and television series to rival media outlets as Iger looks shifts the strategy to boost financial performance.
Thursday: PayPal (NASDAQ:PYPL is due after the close. The payment platform joined a long list of tech employers downsizing their workforce, cutting 2,000 jobs last week, citing macro headwinds. Having digested the announcement, investors will now turn to the payment platform’s first take on full-year guidance. Revenue could reach $30 billion for the first time in 2023, according to Bloomberg consensus, even though Wells Fargo (NYSE:WFC) analysts see “modest risk” to the projection from the slowdown in spending.
Friday: Newell Brands reports before the market open. Revenue for the fourth quarter is projected to see a worsening year-on-year decline compared to last quarter, while adjusted EPS could see the biggest contraction in 14 years. The maker of Sharpie pens and Crock-Pot cookers has come under mounting pressure from slowing growth in its key home business, Raymond James pointed out, adding that increased focus on productivity and cost-cutting measures could help offset challenges at a time when demand is still sluggish.
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