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Market consolidates on Monday following best-performing week of 2023

November 6, 2023| Forex Market


  • S&P 500 gained 5.85% last week, its largest weekly gain all year.
  • A break above 4,393 will end the S&P 500’s three-month downtrend by creating a higher high. 
  • US Treasury yields rise on Monday after sharp decline the previous week.
  • Michigan Consumer Sentiment Index for November is expected to rise on Friday.
  • Disney, AMC Entertainment, Roblox, AstraZeneca and more issue earnings this week.

The S&P 500 index opened higher on Monday but has moved back to flat in the afternoon. The NASDAQ Composite is holding onto its 0.1% gain at the same time.

The S&P 500 index finished up its best-performing week of the year last Friday, rallying 5.85%. Things are less certain this week as there is a surfeit of significant economic data on the schedule, and the earnings calendar offers less appetizing releases than previous three weeks.

“After a deluge of softer than expected US economic data last week, we have a lull, with trade, jobless claims and inflation expectations about the sum of it,” wrote Kit Juckes, the chief FX strategist at Societe Generale. 

The Federal Reserve’s somewhat dovish Federal Open Market Committee meeting last Wednesday and slowing job growth witnessed from the October Nonfarm Payrolls release ushered in euphoria in a downbeat equity market that had been trending lower since late July.

While high US Treasury yields fell drastically last week on the back of the US Treasury Department’s quarterly refunding report, the entire yield curve has risen noticeably on Monday. The 5-year bond yields have risen as much as 1.95% higher.

S&P 500 News: Disney, Roblox, AMC Entertainment, AstraZeneca round out end of earnings season

As November is now upon us, the earnings season is cooling down along with the weather in the United States. 

Disney (D) will be the most-watched earnings release of the week when it comes following Wednesday’s regular session. Wall Street expects adjusted earnings per share (EPS) of $0.71 on $21.41 billion in revenue. This amounts to decent growth from a year ago, but analysts are largely pessimistic on the quarter as the legacy media giant looks to offload several television properties with CEO Bob Iger considering a large-scale turnaround strategy.

The most important earnings news on Monday will be NXP Semiconductors (NXPI), which will be released in the post-market. The Netherlands-based company is lightly covered by Wall Street analysts, but the consensus comes at $3.59 in adjusted EPS on $3.4 billion in sales. 

Tuesday sees two transportation companies on the docket. Uber Technologies (UBER) is forecast to present adjusted EPS of $0.31 on $9.54 billion in sales before the market opens, while Rivian (RIVN) is expected to lose $-1.31 in adjusted EPS on $1.32 billion in sales in Tuesday’s post-market. Expect both stocks to trade in a volatile manner in the leadup to earnings. Analysts are much more bullish on Uber’s release than Rivian’s.

On Wednesday, Roblox (RBLX) consensus for the quarter comes at $-0.50 in adjusted EPS on $820.7 million in sales. The video game platform will likely rise or fall based on the Q4 outlook and the past quarter’s bookings figure. AMC Entertainment (AMC), 2021’s second-favorite meme stock, is expected to lose $-0.25 in adjusted EPS on $1.26 billion in sales, but analysts are more optimistic for this quarter than past releases.

Thursday sees UK-pharmaceutical giant AstraZeneca (AZN) release its quarterly results. The company is forecast to earn $0.82 in adjusted EPS on $11.53 billion in sales.

Michigan Consumer Sentiment Index headlines dry economic news week

As previously mentioned, this week has few economic indicators that are likely to sway sentiments in the equity market. The Michigan Consumer Sentiment Index, which arrives on Friday, is probably the most important though. The preliminary reading for November is expected to rise from last month’s 63.8 print to 64. Traders and investors will want to see this figure improve as it shows the health of the average US consumer, who drives as much as 70% of economic results in the country.

Initial Jobless Claims for the week ending November 3 arrive on Thursday. The figure is expected to fall from the previous week’s 217K to 215K. As long as the print remains near the consensus forecast, the release will not likely alter the index in any meaningful way.


Nasdaq FAQs

The Nasdaq is a stock exchange based in the US that started out life as an electronic stock quotation machine. At first, the Nasdaq only provided quotations for over-the-counter (OTC) stocks but later it became an exchange too. By 1991, the Nasdaq had grown to account for 46% of the entire US securities’ market. In 1998, it became the first stock exchange in the US to provide online trading. The Nasdaq also produces several indices, the most comprehensive of which is the Nasdaq Composite representing all 2,500-plus stocks on the Nasdaq, and the Nasdaq 100.

The Nasdaq 100 is a large-cap index made up of 100 non-financial companies from the Nasdaq stock exchange. Although it only includes a fraction of the thousands of stocks in the Nasdaq, it accounts for over 90% of the movement. The influence of each company on the index is market-cap weighted. The Nasdaq 100 includes companies with a significant focus on technology although it also encompasses companies from other industries and from outside the US. The average annual return of the Nasdaq 100 has been 17.23% since 1986.

There are a number of ways to trade the Nasdaq 100. Most retail brokers and spread betting platforms offer bets using Contracts for Difference (CFD). For longer-term investors, Exchange-Traded Funds (ETFs) trade like shares that mimic the movement of the index without the investor needing to buy all 100 constituent companies. An example ETF is the Invesco QQQ Trust (QQQ). Nasdaq 100 futures contracts allow traders to speculate on the future direction of the index. Options provide the right, but not the obligation, to buy or sell the Nasdaq 100 at a specific price (strike price) in the future.

Many different factors drive the Nasdaq 100 but mainly it is the aggregate performance of the component companies revealed in their quarterly and annual company earnings reports. US and global macroeconomic data also contributes as it impacts on investor sentiment, which if positive drives gains. The level of interest rates, set by the Federal Reserve (Fed), also influences the Nasdaq 100 as it affects the cost of credit, on which many corporations are heavily reliant. As such the level of inflation can be a major driver too as well as other metrics which impact on the decisions of the Fed.


Earnings of the week

Monday, November 6 – Diamondback Energy (FANG), NXP Semiconductors (NXPI), Goodyear Tire & Rubber (GT), TripAdvisor (TRIP, Matterport (MTTR)

Tuesday, November 7 – Gilead Sciences (GILD), Uber Technologies (UBER), UBS Group (UBS), GlobalFoundries (GFS), Rivian Automotive (RIVN), eBay (EBAY), Coupang (CPNG)

Wednesday, November 8 – Roblox (RBLX), AMC Entertainment (AMC), Lyft (LYFT), Warner Bros. Discovery (WBD), Ralph Lauren (RL), Disney (DIS), Biogen (BIIB), Take-Two Interactive (TTWO), MGM Resorts (MGM)

Thursday, November 9 – AstraZeneca (AZN), Wynn Resorts (WYNN), Li Auto (LI), News Corporation (NWSA)

Friday, November 10 – Algonquin Power & Utilities Corp (AQN), StoneCo (STNE)

What they said about the market – Scott Colyer

Scott Colyer, chief executive at Advisors Asset Management, tells Bloomberg that many investors he is speaking with are worried about the Magnificent Seven stocks that have been leading the index all year. These stocks include Meta Platforms (META), Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Nvidia (NVDA) and Tesla (TSLA). Most of these stocks have raised concerns among observers about future growth trends heading into the fourth quarter. The worry is that these stocks comprise such a large segment of the S&P 500 that they could drag down indices in the year’s final two months. Currently, they are nearly 10% lower than their 52-week highs as a group.

“This is all about failure of future guidance. […] Big tech stocks were priced to historic perfection, so that left investors disappointed after those companies came up short.”

S&P 500 forecast

This week it is all about the 4,393 resistance point for the S&P 500. Breaking above that high from October 17 will set the precedent of the first higher high in three months. After holding above the bottom of the support band at 4,100 on October 27, last week saw five straight sessions of advances for the index. This hasn’t happened since a period in late June and early July.

Although Monday’s market seems unlikely to break above 4,393, there is a good chance that will happen this week. The market sure seems like it wants the rally to continue, but higher Treasury yields seem to be trimming any equity exuberance. A failure to conquer 4,393 will almost certainly send the S&P 500 into another serious downtrend.

Above that last lower high lies the earlier September 1 lower high of 4,541. This level is the second focal point for bulls after the index achieves a break above 4,393.

S&P 500 daily chart


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