Dow Jones, Nasdaq, S&P 500 weekly preview: Q2 earnings season is here
The S&P 500 fell 1.2% last week as analysts continue to warn that the stocks are due for a pullback. For the first time in 4 months, the S&P 500 lost at least 0.25% on two consecutive days.
Similarly, the tech-heavy Nasdaq Composite index dropped 0.9% as Apple (NASDAQ:AAPL) lost 1.7%. Dow Jones Industrial Average fell as much as 2% as bulls continue to struggle at the 34600 resistance.
“We continue to see evidence of waning momentum out of secular growth names (FANG+, Semis, etc) and are sticking with our call to fade seasonal July strength in the Nadsaq and see that as having the biggest downside risk here,” BTIG technical strategists said in a client note.
As of Friday, the forward 12-month P/E ratio for the S&P 500 is 18.9, which is above both the 5-year average (18.6) and the 10-year average (17.4).
This week’s focus is on the CPI report on Wednesday, the University of Michigan preliminary report on Friday, and the beginning of the Q2 earnings season. Moreover, a number of Fed officials – including governors Barr and Waller, and presidents Daly, Mester, Bostic, Barkin, and Kashkari – are scheduled to speak this week.
Q2 earnings season is here
The Q2 earnings season is set to start later this week when a number of banks are due to report on their performance for the April quarter. Analysts forecast a decline of 7.2% year-over-year, according to FactSet, worse than the March 31 consensus for a decline of 4-7%.
“With nearly all of the price performance this year attributable to multiple expansion, do earnings matter? While earnings revisions breadth has improved this year, calendar EPS forecasts continue to fall. Higher rates and lower liquidity suggest P/Es are vulnerable unless EPS forecasts rise,” Morgan Stanley
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