According to Blockworks, this week is significant for the stock market as five major technology companies are scheduled to report their earnings. Alphabet will report on Tuesday, followed by Microsoft and Meta on Wednesday, and Apple and Amazon on Thursday. These companies represent about 32% of the QQQ fund's holdings, which has underperformed the Nasdaq Composite over the past 30 trading days, with returns of 1.8% compared to the Nasdaq's 2.4%. Strong earnings reports from these tech giants could potentially lift the index out of its current resistance zone.
In addition to these tech giants, 169 companies in the S&P 500 are also set to publish their quarterly results this week. Notable names include Ford, Visa, Uber, Exxon, and Mastercard. FactSet data reveals that of the roughly one-third of S&P 500 companies that have already reported, 75% have posted earnings per share above analysts' estimates, and 59% have reported better-than-expected revenue for the third quarter.
Nicholas Colas, co-founder of DataTrek Research, noted that the Q3 earnings season has been marginally better than recent past quarters in terms of revenue and earnings beats, although it still lags behind long-term averages. Despite this, the earnings are sufficient to support current S&P levels and expectations for further improvement in Q4 and into 2025. The market will be closely watching to see if this rally can be sustained.
