Big business is about to tell us what's really going on

The first-quarter earnings season is about to start, and, after the stock market’s drubbing this past week, companies should have lots to talk about and be ready to talk about it. 

Stocks suffered their worst two-day losses since 2020 after President Trump announced his new list of tariffs on Wednesday.

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The Standard & Poor’s 500 fell 10,5% over Thursday and Friday. The Nasdaq Composite Index fell 11.4%. The Dow Jones Industrial Average fell 7.9%. 

More than $6 trillion of investor wealth was erased. 

A look at the drubbing

Only 14 S&P 500 stocks were higher on Friday, along with just one stock in the Dow Jones Industrial Average (Nike  (NKE) , up 2.8%) and two stocks among the Nasdaq-100 Index. (MicroStrategy  (MSTR) , up 4%, and Lululemon Athletica  (LULU) , up 3.2%. )

Apple  (AAPL)  has fallen 28% from its 52-week high of $260.10 on Dec. 26. 

When the week began, Apple had the world’s largest market capitalization — nearly $3.3 trillion. 

Apple tumbled 13.6% during the week and, by Friday, was no longer $3-trillion company. Its market cap was “only” $2.83 trillion. 

The Nasdaq and Nasdaq-100 were both off more than 20% from their recent peaks — the popular definition of a bear market.

Related: Car buyers will be shocked by Canada’s harsh tariff decision

The S&P 500 was off 17.4% from its 52-week high on Feb. 19.  The Dow was off 15% from its peak.

In short, the market was not at all behaving like Wall Street had been expecting. You probably heard the experts: There might be a little turbulence to start the year and decent gains by year-end thanks to a good economy, plus tax cuts and deregulation. Just like 2023 and 2024.

There was little talk about massive tariff hikes. 

Could a rebound be ahead?

Markets were so sold off by Friday that the major indexes were showing relative strength indexes well under 30. 

A relative strength index is a measure of how fast something is moving in the short run — up or down— compared with changes over longer periods of time.

In the case of financial instruments, an RSI over 70 or higher is an overbought signal. UNDER 30, a rebound is coming. 

On Friday, the RSIs for the S&P 500, the Nasdaq, the Nasdaq-100 and the Dow industrials had fallen below 25.

So, at least a short rebound relatively soon is possible. If the economy and political world will cooperate. But a sustained recovery will take time.

Related: Supply worries, big speculation push copper to new highs

Six stocks may signal where the market goes next

Earnings reports due this week from an airline and five big financial institutions will help explain where things stand. 

We’ll start with Delta Air Lines  (DAL) , due Wednesday morning. Delta closed Friday at $37.25, down 15% on the week, 38.4% on the year and 46.8% from its 52-week high on Jan. 25. 

Delta and other airlines all started to cut guidance in early March, all citing reduced bookings and demand, due to a stressed economy. The airline said corporate travel is down and regular consumers are increasingly price sensitive to fares. 

The financial institutions, all report early Friday. They are:   

• JPMorgan Chase  (JPM) . Friday close: $210.28, down 7.5%. Change for week: -13.4%. Year to date change: -12.3%. Change from 52-week high: -25%.  
• Wells Fargo  (WFC) . Friday close: $60.98, down 7.1%. Change for week: -13.7%. Year to date change: -13.3%. Change from 52-week high: -25.2%. 
• Investment bank Morgan Stanley  (MS) . Friday close: $99.83, down 7.5%.  Change for week: -13.4%. Year to date change: -20.6%. Change from 52-week high: -29.7%. 
• Investment manager BlackRock  (BLK) . Friday close: $822.62, down 7.3%. Change for week: -13.1%. Year to date change: -19.8%. Change from 52-week high: -24.1%.
• Bank of New York Mellon  (BK) . Friday close: $73.31, down 8.3%. Change for week: -11.4%. Year to date change: -4.6%. Change from 52-week high: -18.9%.

Related: Don’t expect the Fed to rescue stocks from tariff gambit

What investors will want to know is much more than did they make money and what’s the earnings guidance going forward. 

They should demand straight talk about what’s going on in this economy and demand explanations for why a company’s stock has fallen so much this year.

And they will want to know how the companies are planning to navigate through the current situation and through the end of the year.

More Wall Street Analysts:

• Analysts revisit Apple stock price targets as Cook courts Beijing
• Analysts retool Southwest Air stock price targets on cost-cutting
• Analyst reboots Delta, American, Alaska Air price targets on uncertainty
• In a Bear Market, think like Ted Williams

In Delta’s case, the questions should center on demand for travel as well as the impact of tariffs on bookings, both domestic and international.

For the financial institutions, additional questions should be like these: 

• What are your economists telling you know about the U.S. and global economies?
• How is your institution coping with the market volatility since the end of January?
• What stresses are you seeing from your customers?
• How will the Trump tariff regime affect your company’s prospects?
• Is the tariff uncertainty already causing business disruption or planning?
• Lastly, but most importantly, was last week’s slump a signal that an already weak economy has fallen or is near falling into a recession. If so, how serious a recession?

Related: Legendary fund manager sends blunt 9-word message on stock market tumble

Maybe the CEO will be on the earnings call and take charge of the questions. The companies can’t avoid them, and they should offer real insight on what they see. 

Anyone can listen in on an earnings call. Just go to the investor relations section of a company’s website, and there should be a link to the earnings call. A recording is available after the call, and transcripts appear in a few days.

This is likely to be an interesting earnings season.

Related: Veteran fund manager unveils eye-popping S&P 500 forecast