Tech Giant Earnings Propel Stocks; Fed Meeting in Focus

On Sunday evening, U.S. stock index futures edged higher, reflecting the positive momentum from a strong Wall Street session on Friday. This momentum was driven by a rally in mega-cap growth stocks following strong quarterly results from tech giants Alphabet and Microsoft, along with moderate inflation data, fueling a surge in technology stocks. However, the overall market sentiment was weighed down by weaker-than-expected U.S. economic growth in the first quarter. Sectors outside of technology showed less enthusiasm, coupled with persistent signs of inflationary pressures, dampening hopes for imminent interest rate cuts by the Federal Reserve.

Alphabet's announcement of its first-ever dividend and a $70 billion stock buyback program, coupled with better-than-expected first-quarter results, propelled its shares to a record high, pushing its market value above $2 trillion. Similarly, Microsoft exceeded Wall Street estimates, driven by gains from artificial intelligence adoption across its cloud services.

However, not all earnings reports have been favorable, as demonstrated by Meta Platforms witnessing a sharp decline over 10% in its stock price following a higher capex/opex forecast on its artificial intelligence initiatives, dragging down stocks in the communications sector and affecting other segments like healthcare, consumer staples, and real estate. The performance of S&P 500 companies during this earnings season has shown a significant gap between those beating and missing earnings estimates.

Blowout first-quarter earnings from tech giants sparked a surge in technology stocks, driven by optimism about the demand for artificial intelligence in the coming months. The earnings season continues this week, with Amazon and Apple, the last of the "Magnificent Seven" megacap companies, set to report earnings, alongside major companies like Coca-Cola, Advanced Micro Devices, and Eli Lilly.

However, Apple's shares have seen a significant decline this year, with expectations of lower first-quarter earnings due to decreased China smartphone shipments. Amazon's cloud computing business and consumer spending insights will be closely monitored. While solid reports from Microsoft and Google parent Alphabet contributed to the S&P 500's largest weekly gain since November, peers like Tesla and Meta Platforms have shown mixed performance.

Investors are anticipating further insights into the Federal Reserve's stance from the upcoming meeting, with a growing belief that rate cuts may not occur until September or the fourth quarter due to persistent inflation, resilience in U.S. consumer spending, and concerns about U.S. debt levels. Looking ahead, investors are awaiting the release of the March personal consumption expenditures (PCE) price index, a crucial measure of U.S. inflation. The U.S. Treasury Department's forthcoming refunding plans are also awaited for clues about longer-term financing strategies amid worries about increasing U.S. debt. Consequently, it could impact the broader US stock market by potentially maintaining a modest upward trend during this time, although there remains the possibility of increased volatility and the risk of a reversal.

Data for Technical Analysis (30Min) CFD US30 DJIA

Resistance : 38369.7, 38374.8, 38383.0

Support : 38353.3, 38348.2, 38340.0                         

30Min Outlook

Source: TradingView                  

Buy/Long 1 If the support at the price range 38333.3 - 38353.3 is touched, but the support at 38353.3 cannot be broken, the TP may be set around 38369.7 and the SL around 38323.3, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 38369.7 - 38389.7, TP may be set around 38400.0 and SL around 38343.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 38369.7 - 38389.7 is touched, but the resistance at 38369.7 cannot be broken, the TP may be set around 38348.0 and the SL around 38399.7, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 38333.3 - 38353.3, TP may be set around 38320.0 and SL around 38379.0, or up to the risk appetite.       

Pivot Points Apr 29, 2024 02:57AM GMT