Market News
Can “Big Tech” earnings prevent a correction on US futures
Microsoft and Alphabet’s strong earnings have given US futures a temporary lift, with after-hours gains boosting sentiment. However, mounting concerns over US economic activity and technical deterioration on E-Mini NASDAQ 100 and S&P 500 futures raise questions about the sustainability of the rally.
Can “Big Tech” Earnings Prevent a Correction on US Futures?
Strong earnings from Microsoft and Alphabet have boosted US equity futures overnight. However, can this rebound prevent a developing correction? We analyze the results and their impact on E-Mini NASDAQ 100 and S&P 500 futures.
• Microsoft and Alphabet post solid results
• After-hours trading shows strong market reaction
• Concerns over a US economic slowdown weigh on sentiment
• Technical deterioration in US futures poses risks to the rally
US “Big Tech” Stocks Post Strong Results
Microsoft and Alphabet delivered encouraging earnings. Alphabet beat consensus estimates for Q1 sales and earnings, driven by strong performance in search and cloud computing, alongside a $70bn share buyback. Microsoft’s results were even more impressive, with a 7% year-on-year increase in Q3 sales, 9.5% earnings growth, and 22% growth in cloud revenues. Additionally, a $10bn investment in AI development was well-received.
After-Hours Reaction Boosts Sentiment
The results led to significant after-hours gains:
• Alphabet rose 2% to $105.97
• Microsoft jumped 8.4% to $298.68
These gains positively impacted futures, with E-Mini NASDAQ 100 up 1.1% and E-Mini S&P 500 futures up 0.3% early today.
Mounting Concerns Over US Economic Activity
Despite the optimism from Big Tech earnings, broader US economic concerns persist. Recent data highlights weakening trends:
• The Conference Board predicts a mid-2023 recession, citing spreading economic weakness.
• US Consumer Confidence dropped to its lowest since July 2022.
• The Richmond Fed Manufacturing Index is the latest to show a downturn, aligning with broader negative regional trends.
These data points have cast a shadow over US futures, as traders reassess growth prospects.
Technical Outlook for US Futures
E-Mini NASDAQ 100 Futures:
A bearish top pattern formed at 12925.50, with a close below this level signaling a correction. Key levels to watch:
• A break below 12634 could trigger a deeper pullback towards the uptrend channel.
• Momentum deterioration (RSI below 40) would confirm a bearish shift.
E-Mini S&P 500 Futures:
The futures closed below 4096.50, signaling potential downside risks. If the overnight rally fails and prices remain below this level, the following could occur:
• A retreat toward 4000/4010 levels.
• Another rejection at the four-month consolidation resistance.
Outlook
While Microsoft and Alphabet’s earnings offer temporary support, broader economic concerns and technical patterns suggest caution. If futures fail to hold their gains, the developing correction could deepen. Key support levels will determine whether the rally continues or falters.
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