S&P 500 Pulls Back As Big Tech Stocks Retreat

Key Insights

• S&P 500 declined towards the support at 3835 as traders focused on the disappointing reports from Alphabet and Microsoft. 
• Lower Treasury yields and weaker dollar did not provide sustainable support to stocks. 
• Meta’s disappointing earnings report, which was released after the market close, may put more pressure on the S&P 500.

Meta Stock Tests Multi-Year Lows In The Post-Market Session

S&P 500 touched highs at the resistance at 3885 but lost momentum and moved towards the support at 3835 as it was dragged down by the leading tech names.

Alphabet was down by 9% while Microsoft lost 7% after disappointing earnings reports, which were released yesterday after the market close.

Boeing lost 8% after missing analyst estimates and recording an additional $766 million charge on the contract for two new U.S. presidential airplanes.

The negative impact of the disappointing reports from the leading tech companies offset the positive impact of lower Treasury yields and weaker U.S. dollar. The yield of 10-year Treasuries made an attempt to settle back below the 4.00% level as traders bet that the Fed may be forced to be less hawkish.

It should be noted that the Bank of Canada has already decided that aggressive rate hikes were putting too much pressure on the economy and raised the rate by 50 bps, compared to analyst forecast of 75 bps. This move provided some support to global markets.

While leading tech stocks found themselves under pressure, energy stocks like Hess, Halliburton, ConocoPhillips and others were moving higher amid a strong rebound in the oil markets.

In the post-market session, traders focused on Meta‘s quarterly report. Meta reported revenue of $27.71 billion and earnings of $1.64 per share, beating analyst estimates on revenue and missing them on earnings. The company noted that ad impressions increased by 17% year-over-year, while the average price per ad declined by 18%. Revenue declined by 4% on a year-over-year basis. Traders did not like the report, and Meta is down by 12% in the post-market session. Meta’s results may have a material negative impact on market’s mood tomorrow.

Ford reported revenue of $39.4 billion and a loss of $0.21 per share. The loss was driven by the $2.7 billion non-cash impairment of Ford’s investment in Argo AI, which was developing L4 advanced driver assistance systems. Ford’s results were also impacted by supply shortages and higher-than-expected supplier payments. The stock was down by about 1% in the post-market session.

S&P 500 Faced Strong Resistance At 3885

S&P 500 failed to settle above the resistance at 3885 and declined towards the support level at 3835. In case S&P 500 settles below this level, it will head towards the support at 3805, although it should also get some support at the 50 EMA at 3815. A move below the support at 3805 will open the way to the test of the next support at 3760.

On the upside, S&P 500 needs to settle above the resistance at 3885 to continue its rebound. The next resistance level for S&P 500 is located at 3915. If S&P 500 climbs above this level, it will head towards the resistance at 3960.

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