Futures on US stock indices climbed sharply on Thursday as traders locked in profits after the indices approached the yearly low. They also welcomed the strong earnings report of Meta Platforms. It fueled demand for tech stocks. The Dow Jones futures added 363 or 1.1%. Futures on the S&P 500 jumped by 1.7%, and futures on the Nasdaq 100 grew by 2.3%.
Meta shares soared more than 16% in the premarket despite a slight decline in profits. It may be a sign of the recovery in the shattered tech sector. However, compared to last year, the company's shares lost more than 48%.
Qualcomm stocks rose by more than 8% thanks to the company's positive quarterly results. PayPal shares gained 2.8% despite weak forecasts for the second quarter.
Many investors expect that upbeat earnings reports could help tech companies get out of the downtrend that has been formed recently against the backdrop of global events. Nevertheless, high revenue does not guarantee business stability. The Fed is going to tighten monetary policy more aggressively, which is usually a bearish factor for tech companies and their outlooks. To some extent, the future dynamic in the tech sector will depend on the earnings reports for the 2nd quarter. Traders will be curious to find out whether tech giants have achieved the projected figures. Taking into account negative macroeconomic factors, it will be quite hard to top Wall Street estimates.
Yesterday, the Nasdaq Composite fell to its lowest level in 2022 because of the April sell-off caused by the fall of the tech sector. Back then, IT stocks dropped due to a rally in the bond market and expectations of rate hikes.
The S&P500 index dived down by 7.7% in April, repeating the largest monthly decline since March 2020. The Nasdaq Composite index lost more than 12% since the beginning of April. It may show the worst monthly performance since October 2008. The Dow tumbled by about 4% this month.
Today, Apple and Amazon, and Robinhood are scheduled to release their earnings reports. The US is going to unveil GDP figures for the first quarter. Analysts fear that the reading may shrink drastically. Weak GDP data will increase pressure on the US stock market. This is why it is better to remain cautious despite the current growth.
Twitter has reported earnings for the first quarter of 2022. The report came out a few days after the board of directors agreed to sell the company to Elon Musk for $44billion. Earnings per share totaled 61 cents, which did not coincide with economists' forecasts. Revenue rose to $1.2 billion in the first quarter against the forecast figure of $1.23 billion. Daily active users amounted to 229 million against the expected reading of 226.9 million. Twitter shares grew by almost 1% during the premarket.
Outlook for S&P500
The bulls failed to push the price above the $4,265 level yesterday, which triggered a decline to $4,216 and $4,162. However, a sharp jump in stocks today has once again fueled optimism in the stock market. Only a consolidation above $4,216 will help cement the upward movement. However, the price needs to touch again this level today. Thus, it is too early to talk about the bull market. Consolidation above $4,216 will open the way to $4,265, $4,319, and $4,376. If bears regain control, bulls will have to defend $4,162. This scenario looks likely as there are no positive fundamental reports save for the earnings ones. Weak GDP data will also undermine bullish bias. If the price drops below this level, the bears will quickly push it to a low of $4,113. If you have not opened trades in this range, it is better to cancel purchases of the trading instrument to the lows of $4,085 and $4,057.