Investors are bracing for more high-profile corporate earnings amid fears of a recession.
The overnight action followed a three-day winning streak for the blue-chip Dow. All three major averages are up at least 1% week to date.Morgan Stanley's Mike Wilson said investors should brace for tougher times ahead.
"The numbers are actually going to finally come down in a way that we didn't think would happen in Q4, which it didn't, but now, we think that's happening," Wilson said Tuesday on CNBC's "Closing Bell: Overtime." The investment strategist said he expects earnings will start to roll over as companies deal with a weakening consumer. Still, he's open to changing his outlook if he does not see a "more meaningful" drawdown in the next three or four months, or by April. "We will probably back off our call, ... because we're still in a world of somewhat of financial repression, and bonds are not a great alternative necessarily longer term, and stocks are kind of the only game in town in a higher inflationary environment," he said. "We're not willing to make that call today because we think the risk reward is out of whack."Shares of Microsoft led the gains in after-hours trading, up as much as 5% after its quarterly results came in above estimates on top and bottom lines. The stronger-than-expected report was driven by Revenue in Microsoft's Intelligent Cloud segment amounted to $21.51 billion, up 18%. Meanwhile, sales from Azure and other cloud services, which Microsoft does not report in dollars, grew by 31%.
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