Corona Virus
Stay Safe, FollowGuidance
Fetching Location Data…
James Hyerczyk
Earnings Season

U.S. equity markets settled lower across the board on Monday as investors tried to consolidate following last week’s rout. The sell-off was primarily driven by another steep break in the technology sector.

In the cash market, the benchmark S&P 500 Index settled at 2750.79, down 16.34 or -0.59%. The blue chip Dow Jones Industrial Average closed at 25250.55, down 89.44 or -0.35% and the tech-based NASDAQ Composite ended the session at 7430.63.

Apple, all component of all three major stock indexes settled more than 1.8 percent lower. Sellers were responding to a report from Goldman Sachs that said the tech giant’s earnings could fall short this year as demand in China slows.

Netflix, a piece of the NASDAQ Composite and S&P 500 Index, also declined by 1.8 percent. The selling was primarily driven by comments from Raymond James which slashed its price targets on the video-streaming giant.

Continuing to weigh on the technology sector were shares of chipmaker stocks. Some say that the groundwork for the current sell-off was fueled by recent weakness in this sector so it should be watched for signs of a turnaround. Often stocks that led the way down are the first to signal a turnaround. The VanEck Vectors Semiconductor ETF (SMH) declined 1.1 percent, led by a 4.5 percent decline in Nvidia.

Earnings News

Corporate earnings season has kicked off, prompting Goldman Sachs Chief U.S. Equity Strategist David Kostin to say it is time to buy into growth stocks as last week’s sell-off is largely lower. “We see limited further downside,” he said in a note. “Despite the recent sell-off, equity fundamentals are strong and we remain constructive on the path of the S&P 500.”

On Monday, Bank of America reported better-than-expected earnings and revenue. Nonetheless, its shares fell 1.9 percent. Although strong earnings have contributed greatly to the bull market, Monday’s price action only confirms that outside factors are contributing to the current stock market weakness. Furthermore, you have to remember that quarterly earnings actually represent stale data from activity before September 30. Rapidly rising interest rates, a current catalyst, represents now or the future. The stock market discounts future events so watch for news that has to do with future earnings. This puts more importance on guidance.

Later this week, traders will get a chance to react to earnings from Netflix, Morgan Stanley, Johnson & Johnson, Procter & Gamble and Honeywell. Investors will be keying in on Netflix, which releases its earnings report after the close on Tuesday because this stock is one of the bellwether FANGS.

According to FactSet, expectations for this earnings season are high. Its analysts expect third-quarter S&P 500 profits to have expanded by 19 percent on a year-over-year basis.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.