Wall Street stocks are making a strong comeback led by tech stocks. Since November, the Nasdaq 100 had its finest two-day run, with the index jumping 2.18%. Lucid Group, Rivian Automotive, Advanced Micro Devices, Marvell Technology, Tesla and NVIDIA were amongst the top gainers. S&P 500 is up by almost 12% from its October 2022 lows. The S&P 500 surpassed the 4,000 mark, which several technical analysts regard as a make-or-break level that could define the index’s direction.
The S&P 500 and the tech-heavy Nasdaq are up nearly 5% and 9%, respectively, for the year after falling 19% and 33% in 2022. On Tuesday, US Equity futures were trading lower with all three leading indices in the red.
Meanwhile, the earnings season is currently underway and some of the top companies are announcing their quarterly results this week. Microsoft Corporation, Johnson & Johnson, Verizon Communications Inc. and Texas Instruments will be releasing their results today.
Two things seem to be going in bulls’ favour – inflation is fading and top US companies shedding jobs to curtail costs. At the same time, the upside may also look challenging as the possibility of a less hawkish Federal Reserve, China reopening, and a weaker dollar could have been priced in.
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Many analysts are of the view that investors should temper their expectations for premature rate cuts, as the Fed will most likely need to maintain a restrictive monetary policy stance throughout the year to combat inflation. The recent deterioration in economic data, as well as the expected decline in earnings expectations and weak 2023 guidance, point to markets that are likely to fall.
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Morgan Stanley’s investment chief has warned clients that incoming earnings results will likely disappoint investors, sending major stock indexes to two-year lows even if the economy avoids a recession. However, on the bright side, the analyst believes the bear market is nearing its end and could end as soon as this quarter.