S&P 500 Retreats As Meta Nosedives 24%

Key Insights

• S&P 500 declined as Meta’s disappointing results put pressure on the whole tech segment. 
• Treasury yields continued to move lower but did not provide support to the market. 
• A move below the support at 3760 will open the way to the test of the next support level at 3735.

The Tech Segment Remains Weak

S&P 500 declined towards the support at 3805 as tech stocks continued to move lower. Yesterday, Meta released a disappointing earnings report, which put additional pressure on market sentiment in the tech segment. The tech-heavy Nasdaq declined by 1.6% in today’s trading session.

Treasury yields continued to move lower, and the yield of 10-year Treasuries settled below the important 4.00% level. However, lower Treasury yields did not provide enough support to S&P 500 as traders focused on the sell-off in tech stocks.

Traders should note that leading tech stocks like Meta were the main driver behind the strong performance of the S&P 500 in recent years. The current sell-off in this market segment is an uncomfortable signal for S&P 500 bulls. The market has become concentrated, so S&P 500 will not be able to develop sustainable upside momentum if mega cap stocks remain under pressure.

Caterpillar was a notable gainer today as the stock rallied 8% after easily beating analyst estimates on both earnings and revenue.

It looks that S&P 500 will find itself under more pressure tomorrow as Amazon stock is down by 19% in the post-market session after the release of its third-quarter report. Amazon reported revenue of $127.1 billion and GAAP earnings of $0.28 per share,

The company’s GAAP earnings beat analyst estimates but included a pre-tax valuation gain of $1.1 billion from the common stock investment in Rivian. The company expects to report fourth-quarter revenue of $140 billion – $148 billion, a growth of 2-8% compared to the fourth-quarter of 2021.

In the fourth quarter, Amazon expects to report operating income of $0 – $4.0 billion. The weak guidance is the main driver behind the strong sell-off in the post-market session.

Traders should note that Apple will also release its results today, and they may have a material impact on the dynamics of S&P 500.

S&P 500 Settled Below The Support At 3805 In The Post-Market Session

S&P 500 gained strong downside momentum after the release of Amazon’s results and moved towards the support level at 3760. If S&P 500 declines below this level, it will head towards the next support at 3735. A move below the support at 3735 will open the way to the test of the support at 3700.

On the upside, the previous support level at 3805 will serve as the first resistance level for S&P 500. If S&P 500 gets back above this level, it will head towards the resistance at 3835. A successful test of the resistance at 3835 will push S&P 500 towards the resistance at 3885.

For a look at all of today’s economic events, check out our economic calendar.