Key Takeaways

  • Strong earnings reports from tech heavyweights prop the benchmark indexes
  • Analysts will closely examine upcoming GDP and PCE reports for economic insights 

Tech Sways Stocks

The S&P 500 found its footing and snapped a string of five consecutive losses on Tuesday, rebounding with a 0.73% boost. The losing streak was the index’s longest of 2023. The diverse index was supported by strong earnings reported by Google and YouTube parent Alphabet and software superpower Microsoft, partly thanks to their investments in AI. 

That said, Microsoft shares soared 3.6% following a stronger-than-expected earnings report. On the other hand, Alphabet shares dropped almost 7%, despite an 11% burst of growth in revenue for their third quarter. The decline came after investors were disappointed by weak growth for Google’s Cloud services compared to Microsoft’s Azure.

Looking ahead, the world’s largest online retailer Amazon will be releasing its Q3 earnings report on Thursday. Markets expect substantial growth from the web-based megastore, bolstered by Prime memberships and improvements made to their Echo and Firestick devices, as well as heightening momentum for their Amazon Fresh grocery delivery service. The Zacks Consensus Estimate indicates 11.4% growth year-on-year for the September quarter.

Additionally, soft drink company Coca-Cola went above and beyond market expectations, surpassing analysts’ estimates, with net revenue growing 8% year-over-year, with shares rising 2.88% on Tuesday. Growth focused on the away-from-home sector, such as restaurant sales.

The Broader Perspective

Collectively, the earnings reported so far have propped up the S&P 500, with a domino effect knocking into the other key indexes. The performance of these tech titans helps set the tone for market sentiment, a view that was echoed on Tuesday by the Nasdaq’s 0.93% rally and the Dow Jones Industrial Average’s smaller 0.73% gain.  

Inflation data grows closer to the horizon, with the US Gross Domestic Product (GDP) report due on Thursday, and Personal Consumption Expenditure (PCE) and Core PCE reports slated for release on Friday. The Federal Reserve will monitor these reports closely, as the prints will likely shape the central bank’s decision on interest rates. 

Given the influence earnings have had on the market so far, it would suffice to say that traders should remain vigilant. Adapting to evolving market landscapes and staying informed is the key to success.