4/23/2024

Shares closed higher on earnings expectations

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Key points:

  • US stock indexes rose after a series of declines as investors await quarterly reports from major companies but see potential for growth in them.
  • All 11 S&P 500 sectors posted gains, with technology and financials leading the way.
  • Traders are actively preparing for the quarterly reports of the “Magnificent Seven” (Tesla, Meta Platforms, Alphabet, Microsoft).

After a series of declines in previous trading, American stock indices showed growth on Monday. Investors, on the one hand, are on edge ahead of a busy week with earnings reports from major companies, which will become an indicator of the health of the US economy. On the other hand, they see potential opportunities for big profits in these reports.

The S&P 500 rose 0.87% to 5,010.60, adding 43.37 points. The Nasdaq Composite Index added 1.11% to 15,451.31, up 169.30 points. The Dow Jones Industrial Average advanced 0.67%, rising 253.58 points to close at 38,239.98.

Preparing for quarterly reports

On Monday, all 11 sectors of the S&P 500 index closed higher. The leaders were shares of technology and financial companies.

Investors are actively preparing for the quarterly reports of large companies scheduled for this week. The focus is on the “Magnificent Seven” stocks, including Tesla, Meta Platforms, Alphabet, Microsoft.

Large-cap growth stocks performed positively. Alphabet, Amazon and Apple rose in the range of 0.5% to 1.5%. Nvidia shares soared 4.4%, reversing some of the previous day’s 10% drop.

This growth was facilitated by both technical indicators, giving reasons to believe that we should expect strong reports from technology companies, and the reluctance of traders to play against the market before the publication of reports. In addition, investors are optimistic about the Consumer Expenditure Expenditure (PCE) data, which will be released later this week.

It is worth noting that Tesla shares fell by 3.4%. The electric vehicle maker has cut prices on its products in a number of key markets, including China, Germany and the United States.

Total trading volume on the US exchange was 10.33 billion shares, slightly below the average of 11.03 billion over the past 20 days.

Profit on short positions the day before

Last week, however, traders betting against Magnificent Seven stocks recorded record weekly profits of more than $10 billion.

The bulk of this profit came from short positions in Nvidia and Tesla shares. The chipmaker posted its worst weekly decline in more than 19 months last week, losing nearly 14%. The drop was a boon for short-sellers, who ended up making more than $3 billion on it. Bets against Microsoft and Apple generated $1 billion in profits in each of the last weeks.

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