The U.S. stock market is experiencing a tech giant earnings storm, and investors face a harsh reality: even if earnings beat expectations, stocks may not receive their usual reward.

This week, the U.S. market will see earnings reports from a series of heavyweight tech giants. Renowned TMT analyst Peter Callahan noted in a recent report that in today's complex macro environment, investors should pay close attention to these companies' forward guidance rather than just focusing on quarterly results. The current market conditions clearly show that even beating expectations may not guarantee the expected stock price increase.

Callahan's report highlights that in the current macro environment, companies that exceed earnings expectations see an average gain of only 50 basis points the next day (T+1), significantly below the historical average of 101 basis points. Meanwhile, those that miss expectations drop by 247 basis points, worse than the historical average decline of 206 basis points.

It's also worth noting that nearly 40% of the S&P 500's market cap will report earnings this week, along with Friday's nonfarm payrolls data, pushing the market into a critical juncture. This period will be key in determining the market's short-term direction.

'Good News' No Longer Moves the Market

The Nasdaq rose 6.5% last week and is up 1% so far in April. Callahan believes this rebound was driven by multiple factors: better-than-expected earnings (with the tech, media, and telecom sectors showing the highest beat rates), declining volatility (VIX falling to the mid-20s), stable interest rates (the 10-year yield hovering around 4.25%), clearer positioning (tech exposure is near multi-year lows, according to goldman sachs data), and improved policy outlook (the U.S. Economic Policy Uncertainty Index has retreated to March levels).

But there's a brutal reality: even strong earnings reports aren't being rewarded as they once were. Callahan's report notes that in the current macro environment, companies that beat expectations see an average gain of just 50 basis points the next day, far below the historical average of 101 basis points, while those that miss expectations fall by 247 basis points, worse than the historical average decline of 206 basis points.

This phenomenon was perfectly illustrated by Google- which delivered better-than-expected earnings last Friday but saw its stock rise only about 1.5%.

Callahan points out that while the tech sector's earnings beat rate is higher than that of other industries, investors have grown more cautious in their reactions, indicating deep-seated concerns about the outlook.

Hidden Risks Behind a Strong Earnings Season

From a fundamental perspective, the tech, media, and telecom sectors have outperformed market expectations early in the earnings season. This suggests that while investor sentiment may have quickly turned pessimistic, actual corporate and consumer behavior has yet to show significant deterioration.

In other words, the market may be "ahead of the curve," pricing in potential negatives before they materialize in corporate performance. As a result, even when companies exceed expectations, the market's prior pessimism has already dampened the usual stock price rewards.

So far, most of the companies reporting earnings are top-tier tech firms like sap and google, which have delivered stellar results. However, upcoming reports from Apple, Amazon, Microsoft, Meta, and others will help the market determine whether the early strength is just a temporary "highlight" or a sustainable trend.