Wall Street investors are optimistic about the results that big tech companies will announce ahead this week. Since all indices are currently at their all-time highs, investors are maintaining caution.
After early skepticism during Monday’s trading session, the US stock market recovered by end of the day. After dropping to 3800 levels, S&P 500 (INDEXSP: .INX) ended in positive on Monday. Wall Street investors are eagerly waiting for the slew of earnings reports coming from the tech giants this week. Thus, the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) continues to hit new highs on optimism. On Monday, as well as S&P 500, Nasdaq was in green. It closed at a new all-time high of 13,635.99 with Apple Inc (NASDAQ: AAPL) leading the rally. AAPL stock surged 2.77% on Monday ending the day at $142.92 levels.
However, the Dow Jones Industrial Average (INDEXDJX: .DJI) which is less susceptible to technology shares ended red. The DJIA closed at 30,960.00 after losing 36.98 in a single day. This week over 100 S&P 500 companies are likely to release their earnings report. Apart from technology stocks like Apple, Tesla, Netflix, and Microsoft, other big companies like McDonald’s, Boeing, Honeywell, and Caterpillar will report their earnings.
The earnings week kickstarted on a good note on Monday, January 25. As per Bank of America, 73% of the companies that reported the earnings have beaten on both – EPS and sales. However, with all indices trading around their all-time highs, investors are maintaining some caution waiting for clear growth signals. Mark Hackett, Nationwide’s chief of investment research told CNBC:
“Signs of excess continue to concern investors, with markets at near-record highs on a variety of valuation metrics. Other signs of extreme optimism include put-call ratios, credit spreads and momentum indicators.”
S&P 500 and Nasdaq Optimism Supported by Stock Growth
The market remains upbeat on the optimism surrounding AAPL stock. The Cupertino-based tech giant is also giving hints of stronger results. Apple shall be reporting its quarterly earnings on Wednesday after the closing bell. On Monday, January 25, Dan Ives of Wedbush also raised his AAPL price target to $175. He said:
“The Street is anticipating robust results from Apple on Wednesday after the bell with Cupertino expected to handily beat Street estimates across the board. While the Street is forecasting roughly 220 million iPhone units [for 2021], we believe based on the current trajectory and in a bull case Cupertino has potential to sell north of 240 million units.”
President Joe Biden‘s proposal of a $1.9 trillion stimulus push has received backlash from several Republican congresspersons. The stimulus bill includes direct payment transfers, unemployment benefits, stimulus checks to state and local governments, funding for COVID-19 vaccines, and distribution.
On the other hand, the number of COVID-19 cases continues to increase in the U.S. Economists are expecting growth to return in the latter half of 2021. Jan Hatzius, chief economist at Goldman Sachs, said:
“We continue to expect that a reduction in virus risk due to mass vaccination coupled with fiscal support for consumer spending will lead to a mid-year consumption boom and very strong growth in 2021″.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
