Global Stocks Rise as Tech Earnings and AI Investments Drive Market; Oil Slips on Easing Supply Concerns

Global stock indexes climbed on Monday, spurred by anticipation around upcoming earnings reports from several prominent U.S. tech companies. Investors are particularly focused on “the Magnificent Seven”—Alphabet, Meta, Apple, Amazon, Nvidia, Microsoft, and Tesla—which collectively hold significant sway over market performance.

These earnings are expected to reveal not only quarterly performance but also capital expenditures related to artificial intelligence (AI), a hotbed for growth within the sector. Nvidia recently surpassed Apple to become the world’s most valuable company, marking the surge in AI-driven market valuation. The Nasdaq Composite edged closer to record highs as tech stocks led gains, signaling confidence in the tech sector’s long-term prospects despite market uncertainties.

Geopolitical events also shaped Monday’s market dynamics. Over the weekend, Israel responded to an earlier Iranian missile attack by targeting missile-related sites near Tehran, although the strikes avoided oil refineries and nuclear sites. The limited scope of Israel’s strike eased investor concerns over energy supplies, allowing oil prices to slide by roughly 6%. This drop weighed on the S&P 500’s energy sector, which ended down 0.7%, amid lowered supply risks.

Beyond short-term political and economic considerations, Bank of America’s (BofA) recent analysis points to limited long-term growth in the S&P 500. The index is currently deemed expensive, with BofA projecting only 1–2% in annualized price growth over the next decade based on the Price to Normalized Earnings metric. However, a more favorable return outlook exists for the equal-weighted S&P 500, which excludes the outsized influence of the largest companies and may deliver returns of 4–5% annually. Additionally, dividends—historically a strong contributor to total returns—could reemerge as a crucial factor if dividend yields revert to long-term averages.

Market analysts are also bracing for significant economic data releases this week, including the Fed’s preferred inflation gauge, the PCE Price Index, due Thursday. Coupled with third-quarter gross domestic product data and October’s labor market report, these indicators could offer insight into the Federal Reserve’s future policy, especially as the Fed assesses inflation dynamics ahead of an anticipated rate hike decision. Some experts suggest a more cautious tone from investors as the Fed’s data-driven approach unfolds in the coming weeks.

The nearing U.S. presidential election on November 5 is another key factor. Election polls show a tight race between Democratic Vice President Kamala Harris and former President Donald Trump, with recent shifts suggesting a slight edge for Trump. This political uncertainty adds to market caution, as investors weigh potential policy shifts impacting the economy. U.S. Treasury yields have hit three-month highs as demand for safer assets rises amid this pre-election ambiguity.

Data for Technical Analysis (1H) CFD US30 DJIA

Resistance : 42386.0, 42392.9, 42404.0

Support : 42363.8, 42356.9, 42345.8                              

1H Outlook      

Source: TradingView       

Buy/Long 1 If the support at the price range 42338.8 - 42363.8 is touched, but the support at 42363.8 cannot be broken, the TP may be set around 42388.9 and the SL around 42326.3, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 42386.0 - 42411.0, TP may be set around 42447.0 and SL around 42351.3, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 42386.0 - 42411.0 is touched, but the resistance at 42386.0 cannot be broken, the TP may be set around 42359.8 and the SL around 42423.5, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 42338.8 - 42363.8, TP may be set around 42302.0 and SL around 42398.5, or up to the risk appetite.       

Pivot Points Oct 29, 2024 02:36AM GMT