This week in the stock market has seen a flurry of activity, including swings in major indices, earnings reports from big companies, and concerns over ongoing debt ceiling negotiations.
Market Performance
The Dow Jones Industrial Average futures fell by 0.18%, marking a fourth straight day of losses for the index. On the other hand, Nasdaq 100 futures surged by 1.4% on the back of a strong earnings report from Nvidia. S&P 500 futures gained 0.45%1.
The S&P 500 broke above a key resistance level of 4,200 last week. For the rally to continue, experts suggest that the S&P 500 and Nasdaq 100 need to hold above 4,155 and 13,525, respectively, by the end of the week. Overbought conditions are currently in place on the daily and weekly charts. However, if the breakouts are confirmed, investors are advised to reduce their bearish hedges and use any eventual pullback in stock prices as an opportunity to position their portfolios more offensively for a continued rally2.
Earnings Reports
Nvidia, the artificial intelligence beneficiary, reported stronger-than-expected revenue guidance for its fiscal second quarter. The company’s shares surged 25% in extended trading, bringing its market cap near $1 trillion. This was Nvidia’s biggest earnings beat since May 2018, and its biggest revenue beat since November 20171.
On the other hand, Snowflake, the cloud computing company, saw its shares tumble 12% after hours. This was due to weaker-than-expected product revenue guidance for the fiscal second quarter, despite beating analysts’ expectations for earnings and revenue in the first quarter1.
American Eagle Outfitters also reported a mixed quarter. The company’s shares slid 15% after it said it expects second-quarter revenue to fall in the low single digits, instead of up 1.6% as per consensus expectations. However, its per-share earnings came in line with estimates, and its revenue beat expectations1.
Debt Ceiling and Other Concerns
Negotiations over the debt ceiling continue to impact the market. Fitch Ratings put the U.S.’ AAA long-term foreign-currency issuer default rating on a negative watch, citing the ongoing debt ceiling talks as a risk. The agency still expects a resolution before the X-date1.
Minutes from the Federal Reserve’s latest meeting showed that leaders were uncertain about how to proceed with their rate hiking campaign, adding another layer of uncertainty to the market1.
Upcoming Events
Traders can look forward to corporate earnings reports from Best Buy, Dollar Tree, and Ralph Lauren on Thursday before the market opens. Additionally, the second reading on gross domestic product in the first quarter and the latest weekly jobless claims data will be available before the open on Thursday1.
April’s pending home sales data is also expected after the market opens. Economists polled by Dow Jones expect a rise of 0.8%, up from the decline of 5.2% the prior month1.
Gold Prices
Gold prices have seen a breakdown, with the perceived safe-haven commodity falling 5% from its early-May high of $2,085 per ounce. The current support level for gold is at $1,930 per ounce, representing potential further downside of 2% from current prices.