Dow Jones, Nasdaq, S&P 500 weekly preview: Testing key support ahead of Big Tech earnings
At the start of the new trading week, major technology stocks are falling, also driving the U.S. equity futures lower, as the 10-year Treasury yield crossed 5% for the first time in 16 years.
The new wave of selling comes after the S&P 500 (SPX) lost as much as 2.4% last week. The index is now testing the key near-term support in the range of 4180-4200. A break of this zone would mark a major bearish development that could take the S&P 500 below 4000 in the coming months.
The forward 12-month P/E ratio for the S&P 500 now stands at 17.7, which is below the 5-year average (18.7) but above the 10-year average (17.5).
The Nasdaq Composite Index (IXIC) lost 3.2% with the tech-heavy index now trading at the lowest levels since May. Tesla (NASDAQ:TSLA) contributed to the downfall with its shares closing over 15% lower in response to the soft Q3 earnings report and cautious comments on the earnings call.
Finally, the Dow Jones Industrial Average (DJI) index fell 1.6% to close below the 100-moving average.
“The bears won the week on a variety of fronts, including geopolitics (where tensions escalated globally), rates (long-end Treasury yields rose further), the trajectory of underlying growth (which seems to be cooler than the headline government statistics would suggest), and earnings (there were plenty of upside earnings reports, most notably NFLX, but the greater number of surprises came on the downside),” analysts at Vital Knowledge said on Friday.
The key economic data piece for this week is the U.S. GDP Q3 print that is out on Thursday.
As of Q3 2023, with 17% of S&P 500 companies having reported actual results, 73% of them have exceeded their earnings per share expectations, and 66% have surpassed revenue expectations,
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