Tech-Led Rebound Amid Volatility: Market Eyes Major Economic Data and Big Tech Earnings

U.S. stock index futures remained steady in evening trading on Monday as Wall Street's recovery paused ahead of earnings reports from major technology companies later in the week. The broader U.S. stock market saw gains after the close, with the Technology, Financials, and Utilities sectors leading the way. Investors awaited key inflation data, which would influence the Federal Reserve's policy outlook. Concerns about prolonged high interest rates contributed to recent market volatility.

The S&P 500 experienced its worst weekly performance since March 2023 last week, driven by worries about inflation and monetary policy. The index rebounded on Monday, fueled by strength in the technology sector.

Last week's market correction deepened on Friday as the S&P 500 breached the psychologically significant level of 5,000, following a week of selling prompted by various factors. These included higher-than-expected inflation in March, geopolitical tensions such as the Israel-Iran conflict, and mixed reactions to earnings releases, even from major companies like Procter & Gamble and American Express.

Wall Street indexes rebounded on Monday after two weeks of losses, primarily led by the tech sector, which saw lower valuations attracting bargain hunters. Notable gains were seen in companies like NVIDIA, Meta, Microsoft, and Alphabet ahead of their earnings announcements. Decreased concerns over escalating Middle East tensions also supported market sentiment.

Investors focused on upcoming earnings reports from major tech companies, including Tesla, Meta Platforms, Microsoft, and Alphabet, dubbed the "Magnificent 7", as these companies hold significant weight in the S&P 500. Tesla faced challenges, including price cuts in key markets, potentially triggering a price war and squeezing margins. Other notable movements included Verizon's stock decline despite better-than-expected subscriber numbers, and Zions Bancorporation's rise on strong quarterly results.

Cryptocurrency-related stocks such as Marathon Digital Holdings Inc, Coinbase Global Inc, Riot Platforms, and MicroStrategy Incorporated saw significant movement as Bitcoin surged to $66,402 following its halving event, which reduces the production of Bitcoin by miners.

Meanwhile, the yield on the 2-year Treasury briefly exceeded 5%, reflecting recent gains as investors awaited key economic data, influencing inflation expectations. Expectations for rate cuts have diminished, with only two cuts anticipated, below the Fed's projection, with focus on Chairman Jerome Powell's commentary on the rate outlook during the unchanged rate decision expected on May 1.

This week, the market's attention will likely center on major economic events, including the release of durable goods and preliminary GDP reports, and the core PCE inflation report. Analysts have revised downwards their expectations for S&P 500 earnings growth in the first quarter, citing dimmed expectations compared to earlier estimates. Hence, it could impact the broader US stock market, leading to expectations of ongoing volatility and persistent risk of reversal in the near term.

Data for Technical Analysis (1H) CFD US 500 [S&P 500]

Resistance : 5010.0, 5012.1, 5015.6

Support : 5003.0, 5000.9, 4997.4                           

1H Outlook

Source: TradingView                                                     

Buy/Long 1 If the support at the price range 4997.0 - 5003.0 is touched, but the support at 5003.0 cannot be broken, the TP may be set around 5010.4 and the SL around 4994.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 5010.0 - 5016.0, TP may be set around 5020.0 and SL around 5000.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 5010.0 - 5016.0 is touched, but the resistance at 5010.0 cannot be broken, the TP may be set around 5001.3 and the SL around 5019.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 4997.0 - 5003.0, TP may be set around 4991.8 and SL around 5013.0, or up to the risk appetite.       

Pivot Points Apr 23, 2024 02:42AM GMT