U.S.: Major high-tech companies to evaluate their final accounts

■　The results of the final accounts of the major U.S. high-tech companies will serve as a clue to the future direction of the entire market.

  In the U.S. stock market, investors' risk appetite is improving. A mainstream U.S. media outlet reported that the U.S. Federal Open Market Committee (FOMC) will meet on November 1 and 2 to discuss lowering interest rates at its December meeting. Expectations that the U.S. Federal Reserve will continue to raise rates sharply by 75 basis points at its December meeting grew stronger following comments from key Federal Reserve officials, reports that were seen as clues that the pace of rate hikes was slowing and gave a boost to stocks.  However, with no change in the Fed's cautious data on prices and the labor market, it is difficult to be optimistic that the recent stock market rally will lead to a full bottoming out of stock prices.

 In addition, the publication of final accounts of major U.S. companies is being formalized. As of July 24, 99 of the S&P 500 constituents reported financial results for the July-September period, with 75 percent of them reporting earnings per share (EPS) that exceeded market expectations.US equities have been resilient, with buying in stocks that announced good final results, but EPS estimates were revised to +3.0% y/y for the same period, the sustainability of the buying sentiment is questionable against the backdrop of better-than-conservative earnings expectations. Although market forecasts for EPS growth have been revised down from early October (7.7% and 7.8%, respectively) to 6.8% in 2022 and 7.0% in 2023, they tend to lag behind substance and the outlook remains uncertain.

 Against this backdrop, it is worth watching this week as the top five US technology companies (GAFAM: Alphabet, Amazon, Meta, Apple and Microsoft) will focus on reporting earnings, which could change investors' risk appetite. The breakdown of sales in 2021 shows a wide variation in business models, with advertising revenue accounting for more than 80%, equipment sales revenue accounting for more than 80%, and electronic commerce (e-commerce) in North America accounting for 60% of sales.Examine financial results to identify changes in the business environment and use them as clues to the overall market direction.