This week, Microsoft, Intel and Tesla will announce their fourth-quarter results, which will set the course of the industry in the sector.
Monday was a bullish continuation day for US indices, following a strong boost from Fed official Waller's "dovish" comments at the end of the week. In the midst of earnings season for the most influential segment of the US stock market, technology stocks led the way higher. They are the companies with the largest market capitalizations.
Names like Microsoft, Intel, and Tesla will release their fourth-quarter results this week, which will set the course of the industry in a sector that has faced a significant downward adjustment due to interest rate increases throughout 2022.
This negative sentiment has been fading in recent weeks as technology companies shift their focus to cost-cutting and inflation shows signs of easing, causing market interest rates to fall significantly. The yield on the 10-year US Treasury note remained around 3.52% yesterday.
The Nasdaq technological index rose more than 2% yesterday, breaking the downward trend line that has been in place since the fall of 2022. This is a bullish technical signal that, if confirmed by a weekly close at these levels or higher, will pave the way for larger gains in the near future.
For this to happen, the earnings of the tech companies that make up the Nasdaq 100 must not disappoint, and the Federal Reserve's recent shift towards a more dovish bias should be confirmed at the next meeting. Currently, the market expects a rate increase of only 25 basis points.
China's reopening after a long period of COVID-Zero policy is another thing that is making people feel better about the market. The elements that contributed the most to the uncertainty in the market and the rise in inflation, such as the bottlenecks in the supply chains (largely due to the closure of activity in China) and the extraordinary surge in raw material prices, have been corrected.
Natural gas was one of the commodities that caused the most concern, especially in Europe. Following the extraordinary rally caused by the conflict in Ukraine, natural gas has corrected downward and is now trading at levels similar to those of 2020. Technically, it has broken the support at $3.35 and is making its way to falling below $3.
Sources : Bloomberg, Reuters