Corporate Earnings in Focus as Fed Enters Blackout Period

S&P 500, Corporate Earnings – Talking Points

• S&P 500 continues bullish push as key resistance comes into view
• Federal Reserve enters blackout period ahead of next week’s meeting
• Mega-cap tech earnings likely to set the tone for risk assets this week

The S&P 500 is pushing higher on Monday as traders await a critical week of corporate earnings. Equities are coming off their best week since June, as the S&P 500 rose 4.7% last week. The surge in risk last week came as the US Dollar cooled off significantly during Friday’s session, following Bank of Japan intervention in the FX market and a Wall Street Journal article from Nick Timiraos.

In comments made last week, San Francisco Fed President Mary Daly said that the Fed may need to start considering rate hikes of 50 or 25 basis points. While the market latched onto that idea, many will make the case that the Fed is still lacking any data that would point them to slowing down. While overtightening is certainly a risk, “under-tightening” is also a major risk. As we now sit in the Fed’s “blackout” period ahead of next week’s interest rate decision, market participants will likely look to mega cap tech earnings for a clearer picture for near-term direction.

After a strong start to the earnings season thanks to a slate that was “bank-heavy,” attention now shifts to the heavy hitters in tech. Given their weighting(s) in the major US benchmarks, this may be a make-or-break period for US equities. If the S&P 500 is to break above the early October swing high around 3820, it may need help from tech. Below I have pulled out the major names that are set to report over the coming sessions, along with current Wall Street estimates.

Key Earnings Releases This Week with Wall Street Estimates

Apple (AAPL)

• Revenue: $88.90 billion
• EPS: $1.27

Alphabet (GOOGL, GOOG)

• Revenue: $70.68 billion
• EPS: $1.26

Amazon (AMZN)

• Revenue: $127.57 billion
• EPS: $0.22

Microsoft (MSFT)

• Revenue: $49.73 billion
• EPS: $2.31

Meta (META)

• Revenue: $27.41 billion
• EPS: $1.89

Following a strong move higher to close out last week, S&P 500 futures (ES) have continued to march on toward the monthly highs around 3820. The 3802 level continues to offer some significant resistance, as it represents the 61.8% retrace of the advance off the March 2020 lows. The monthly high around 3820 also coincides with the 38.2% retracement of the pullback off the August highs, which sits at 3817. So far this zone above 3800 has held firm. But a series of higher lows and higher highs following the post-CPI poke to 3502 indicates that bulls may be gaining momentum. Bulls may continue to pick away at this massive resistance zone, and slowly eat away at the wall of stops.

If tech earnings are able to surpass market expectations, ES may look to advance up to the 3902-3914 area which is yet again an area of fib confluence. Should this earnings period prove to be a mixed bag, the direction for equities may rely solely on the guidance given by these major companies. In times of heightened volatility, traders should remember to remain nimble. As we have seen in FX, rapid moves can develop out of nothing.

S&P 500 Futures 4 Hour Chart

Chart created with TradingView

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— Written by Brendan Fagan

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