Will stock prices drop further today? Investors await key reports from major tech companies.
Wednesday’s trading session began on a neutral note despite a series of economic data releases and earnings reports. Investors were focused on key big tech earnings set to release after the close (MSFT, META), and stocks showed a downward trend before the end of the session. Ultimately, the S&P 500 index closed 0.33% lower, extending its short-term consolidation. This morning, the index is set to open 0.6% lower as sentiment has weakened in response to earnings results and economic data, including the Core PCE Price Index reading which came in as expected
The individual investor sentiment improved slightly, as shown in yesterday’s AAII Investor Sentiment Survey, which reported that 39.5% of individual investors are bullish, while 30.9% of them are bearish, up from 29.9% last week.
The S&P 500 continues its short-term consolidation, as we can see on the daily chart.
Nasdaq 100: Pulling Back from Local Highs
The Nasdaq 100 traded sideways on Wednesday, ultimately closing 0.79% lower. This morning, it is expected to open 0.6% lower after yesterday’s earnings reports from META and MSFT. Today, the focus will shift to post-session quarterly earnings reports from AAPL, AMZN, and INTC. Resistance is near 20,600, with support at 20,000.
VIX Closed Above 20
The VIX index, a measure of market volatility, remains near the 20 level, reflecting heightened caution in the market.
Historically, a dropping VIX indicates less fear in the market, and rising VIX accompanies stock market downturns. However, the lower the VIX, the higher the probability of the market’s downward reversal. Conversely, the higher the VIX, the higher the probability of the market’s upward reversal.
Futures Contract Near Local Lows
The S&P 500 futures contract declined to the 5,800 level following major tech earnings, approaching last Wednesday’s local low. Resistance holds at 5,900-5,925, with support at 5,800-5,825. Consolidation has now extended for two weeks, and upcoming data and earnings could prompt a breakout in either direction.
Conclusion
Expectations are negative for the S&P 500 at today’s opening. However, it remains uncertain whether the index will break below its recent trading range or continue to consolidate. Later today, technology sector volatility may increase as investors await earnings from AAPL, AMZN and INTC.
Last Friday, I wrote “The S&P 500 is likely to fluctuate ahead of significant earnings reports over the next two weeks and the upcoming presidential elections.” This outlook still applies, as the market could experience more volatility due to economic data, earnings, and the upcoming presidential elections.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- The S&P 500 continued sideways trading on Wednesday.
- This still appears to be an extended consolidation following the rally from September’s low, with investors awaiting key announcements.
- In my opinion, the short-term outlook is neutral.
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Paul Rejczak,
Stock Trading Strategist