Facebook (FB) CEO Mark Zuckerberg has gone to Washington, D.C.
On Monday, Zuckerberg met with lawmakers on Capitol Hill, including Sen. Bill Nelson (D-Fla.), ahead of two days of testimony set to begin Tuesday with an appearance before a Senate committee.
Zuckerberg’s prepared remarks to be made before the House Energy and Commerce Committee on Wednesday were released Monday, with Zuckerberg set to tell lawmakers, “it’s clear now that we didn’t do enough to prevent these tools from being used for harm as well. That goes for fake news, foreign interference in elections, and hate speech, as well as developers and data privacy.”
Adding, “We didn’t take a broad enough view of our responsibility, and that was a big mistake. It was my mistake, and I’m sorry. I started Facebook, I run it, and I’m responsible for what happens here.” Expect Zuckerberg’s opening statement on Tuesday to be similar.
Markets are likely to be fixated on Zuckerberg’s testimony over the next two days as investors continue to sort out the business implications of Facebook’s increasingly messy image. Shares of the company gained 0.4% on Monday but remain about 10% off record highs.
Elsewhere on the calendar on Tuesday, the earnings schedule is devoid of any major earnings while the economic agenda brings us the March reading on small business optimism.
Additionally, investors will look for a bounce back in the stock market after a really messy close on Monday saw the major averages finish with just meager gains after having gained more than 1.5% earlier in the session. In the end, the Dow gained just 46 points, or 0.2%, the S&P 500 gained 8 points, or 0.3%, and the tech-heavy Nasdaq added 35, or 0.5%.
Stellar earnings coming up
First quarter earnings season is set to kick off this week.
And the news is going to be great.
In a note to clients published Monday, Jonathan Golub and the equity strategy team at Credit Suisse said first quarter earnings are likely to grow 15.5% over the prior year excluding the benefits from tax reform. Including assumed tax benefits, consensus expectations for earnings per share in the first quarter is for an 18.3% increase over last year.
And this comes after we reported on data from FactSet late last month which showed the change in expectations for annual earnings per share growth during the first three months of the year was the largest in at least 15 years.
Yet this good news about corporate America seems unlikely to be enough to get the choppy stock market moving up and to the right again.
Of course, the first risk to markets that many investors will think of right now is a trade war. Analysts at Goldman Sachs said on Friday, however, that, “trade tensions represent a minimal risk to S&P 500 earnings in aggregate.”
As we’ve noted before, work out of Bank of America Merrill Lynch published earlier this year showed that strong earnings performance often comes in years when the market finishes in the red.
This shows that expected earnings are more important to investors than realized earnings. The expectations of 2017, then, were a more useful stock price signal than the strong earnings results that are likely to be reported over the balance of 2018.
Good news today, then, is less important than anticipated good news tomorrow when it comes to higher stock prices.
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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