So far this earnings season, investors are in a downright bearish mood, punishing companies that report top- or bottom-line misses, or those that disclose a less than rosy full-year forecast. Making matters worse, they’re also giving very little love to those companies that are successfully outmaneuvering inflation and war in Ukraine to deliver impressive earnings beats.

According to FactSet, 79% of S&P 500 companies that have reported results thus far have delivered an upside EPS (earnings per share) surprise. And investor reaction? The benchmark index is down over the past three straight weeks, even falling into correction territory following Friday’s dismal performance. The blue-chip Dow Jones industrial average is faring even worse, down four consecutive weeks; Friday’s 981-point selloff was its worst one-day slide in more than two years.

Most analysts blamed the recent swoon in equities on a more hawkish Federal Reserve. Chairman Jerome Powell late last week strongly hinted a 50-basis-point hike is in the cards in early May as the central bank tries to tamp down inflation. All three major averages sank after that.

“Investors appear to be moving away from the TINA—there is no alternative—narrative as of late when it comes to equities,” Brian Price, head of investment management for Commonwealth Financial Network, said on Friday. “This is the second straight week of significant outflows from equity mutual funds, and days like today are unlikely to change the sentiment moving forward.”

Others think the selloff in stocks is overdone, given the relative strength of corporate earnings and hopes of an improving inflation picture.

“At some point, and we think that moment is coming, Wall Street should grow more comfortable with the new monetary policy paradigm we have entered, and U.S. stocks should catch a bid. On that point, Q1 earnings have come in fine, the U.S. yield curve has steepened—a harbinger of better economic times to come—and inflation looks to be peaking,” said Tim Holland, chief investment officer at Orion Advisor Solutions.

Look ahead

On Monday, the risk-off mood hung over global markets thick and heavy. In Asia, there are real concerns Beijing is the next major Chinese city heading for a COVID lockdown, tanking shares on the mainland (off 5% in Shanghai at the close) and in Hong Kong (the Hang Seng tumbled 3.6%).

It’s not much better in Europe.

The election victory by France’s Emmanuel Macron over the far-right Marine Le Pen failed to lift European bourses. Shares in Paris fell 1.8% lower at the open, taking the euro down with them. In a further sign of investor pessimism, the safe-haven dollar climbed against the world’s major currencies, and bond prices on both sides of the Atlantic fell.

U.S. futures, too, are under pressure on Monday. At 5:30 a.m. ET, Nasdaq futures were off 1%. That’s after the so-called FANG+ stocks lost nearly 9% last week, hurt by Netflix’s abysmal results. And, as we’ve seen in 2022, when tech stocks slide, so too do cryptocurrencies. Bitcoin fell to a six-week low on Monday, hovering around $38,500. BTC is down nearly 7% over the past five trading days.

Which companies report this week

There are roughly 320 S&P 500 companies still scheduled to deliver results this earnings season. And this week is one of the busiest of all stretches, creating a big test for the markets. On deck this week are big-name tech and consumer products brands, which should give investors a strong indication about the impact of inflation on corporate bottom lines, and whether beaten-down tech stocks are poised for a rebound.

In the latter category, Microsoft and Alphabet report tomorrow, with Apple, Amazon, Twitter, and Intel set to go on Thursday. Meanwhile, Coca-Cola reports today, with PepsiCo (Tuesday), Kraft Heinz (Wednesday), and Nestlé (Friday) scheduled for later in the week.

If corporate earnings still have the firepower to save investors’ portfolios, this will be the week to watch.