S&P 500 AND NASDAQ 100 WEEKLY FORECAST: SLIGHTLY BULLISH
- Corporate earnings will be key for the U.S. stock market in the near term
- Netflix and Tesla’s quarterly results will be in focus in the week ahead, following strong profitsfrom major banks in the last few days
- If the tech sector performs well and issues positive guidance, there is scope for the S&P 500[1] and Nasdaq[2] 100 to continue their recovery
Most read - S&P 500, DAX 40, FTSE 100 Forecasts: Bank Earnings Trigger Risk-on Mood[3]
In recent months, a lot of pessimism has percolated through the marketon fears that red-hot inflation, stoked by surging energy prices and supply chain disruptions, will weigh on consumer sentiment and curtail economic growth. The anxiety has translated into investor caution, increased volatility, and moderate S&P 500 and Nasdaq 100 weakness, but it hadn’t yet led to a major correction as dip buyers have emerged at every opportunity to fuel a rebound and propel equities higher.
However, with third-quarter earnings season in full swing, dip buyers may be reluctant to step in in the event of a significant pullback, especially if U.S. companies underwhelm expectations and start issuing profit warnings left and right. Fortunately, this has not yet been the case; on the contrary, most firms that have reported results so far have surprised on the upside, with the big banks beating consensus by a wide margin[4] and offering constructive guidance despite the various economic headwinds. Goldman Sachs, for example, crushed analysts’ forecasts handsomely, with profits jumping 63% and revenue climbing 26% year-on-year, thanks to record deal-making activity in its investment banking unit.
Sadly, financials[5] account for only ~11% of the S&P 500, so before assessing the broad stock market
