Google and Microsoft Earnings, FOMC Meeting, and US GDP are Awaited by the S&P 500 and Nasdaq 100

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EnclaveFX
Jul 26, 2022
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US STOCKS OUTLOOK:  

 

lThe Nasdaq 100 declines for a second straight day while the S&P 500 posts a modest gain.

lThe focus will be on Microsoft and Alphabet's financial results on Tuesday.

lThe focus on Wednesday will be the FOMC's decision on monetary policy.

 

Before significant corporate earnings from well-known tech companies and critical economic events like the July FOMC monetary policy decision (Wednesday) and the U.S. second-quarter gross domestic product report, U.S. stocks were mixed on Monday amid cautious sentiment in a session devoid of significant drivers or extreme volatility (Thursday).


The S&P 500 increased 0.13 percent to 3,966 at the closing bell, with the energy sector outperforming all other sectors thanks to a substantial increase in oil and natural gas prices. In contrast, the Nasdaq 100 fell 0.55 percent to 12,328, losing momentum for the second straight day due to rising U.S. Treasury yields and a steep drop in the share prices of Nvidia, Meta Platforms, and Adobe.


Looking forward, several triggers to watch out for this week might cause volatility in the equity market. Traders should analyze the financial statements from Microsoft and Alphabet, the parent company of Google, on Tuesday.


Given that both businesses' combined market capitalization exceeds $3 trillion and are strongly weighted in the S&P 500 and Nasdaq 100, their stock performance may significantly impact Wall Street.


Analysts expect Microsoft (MSFT) will earn $2.28 per share on sales of $52.87 billion. Alphabet (GOOGL) is currently reported to have made $1.28 per share on a revenue of $70.78 billion. While quarterly performance will undoubtedly be necessary, it is crucial to focus more on profit guidance to determine whether these major technology companies are geared up for a substantial downturn, given that they have scaled back on recruiting.


The FOMC interest rate decision will be the focus of attention on Wednesday. The Fed is anticipated to continue its aggressive monetary tightening to combat inflation by increasing interest rates by 75 basis points to 2.25 percent – 2.50 percent. Since this move has already been fully priced, trading attention should be placed on Chairman Powell's news conference remarks.


Powell is unlikely to reveal any new hawkish bombshells, given that it is anticipated that U.S. consumer prices will decline in the upcoming months due to the recent decline in commodity prices and rising recession risks.


Although short-term fluctuations in profits and economic activity may be more significant for risk assets, this situation may be slightly positive for stocks.


TECHNICAL ANALYSIS OF THE NASDAQ 100:


The Nasdaq 100 experienced a robust early-week rally, but after prices failed to overcome support above 12,600, the upward impetus slowed. The index has started to retrace its steps from those peaks, and on Monday, it fell for two straight days. Initial support rests at 12,250 in case selling interest picks up in the upcoming days. If the tech benchmark continues to decline, it might approach the crucial 12,000 mark and threaten its 50-day simple moving average.


On the other hand, if buyers take back control of the market and start a bullish reversal, the first resistance to consider is located around the 12,600 regions. If this cap is broken, we might observe a move toward the 13,000 zones.