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APPLE LIKELY TO DICTATE THE FATE OF BIG TECH IN BUSY EARNINGS WEEK (1052 ET/ 1452 GMT)
Slowing global growth worries have slammed U.S. stocks at the start of one of the busiest week of earnings season that will include quarterly reports from tech-related heavyweights.
Apple Inc, Microsoft Corp, Google-parent Alphabet, Meta Platforms and Amazon.com Inc - that account for a quarter of S&P 500's weight - are all slated to report their earnings in the coming days.
Wedbush analyst Dan Ives believes both Microsoft and Apple will post strong numbers this week, which could dictate the path of tech stocks over the coming months.
"We continue to view this bifurcated tech tape will be driven higher by software, semis, cyber security, and product driven names (Apple) as part of this digital transformation, while the (work from home) poster children such as Netflix, Meta, Zoom, Docusign, etc. will continue to see multiples compress as results soften off pandemic highs," Ives said.
AJ Bell Investment Director Russ Mould noted Meta, Amazon Apple, Netflix and Microsoft have lost $2.1 trillion in combined market value between them since their December peaks, a drop sharp enough to leave five of the six in 'bear market' territory, with Apple the sole exception.
"That raises the stakes for Apple's second-quarter results on Thursday as any degree of disappointment here – or weak guidance for the third quarter – could put a further squeeze on the share prices of Big Tech and possibly the wider US stock market," Mould explained.
A shocking subscriber loss at streaming giant Netflix Inc last week triggered a selloff in growth stocks.
Growth stocks outperformed value plays in early New York trading Monday, with Amazon, Facebook, Alphabet and Microsoft rebounding from sharp losses on Friday.
(Medha Singh)
DOW, S&P 500 EXTEND RECENT SELLOFF EARLY, BUT TRADING CHOPPY (1020 EDT/1420 GMT)
Major U.S. stock indexes are mostly down in choppy early trading on Monday, extending recent losses amid worries over COVID cases in China and possibly an aggressive U.S. interest rate hike schedule.
The Dow and S&P 500 fell more than 1% each after the opening bell, but are last well off those lows.
Most of the major S&P 500 sectors are lower in early trading, with energy down more than 4%, leading declines.
Of note, the Nasdaq Composite hit a low at 12,722, putting it around 1% from its March intraday trough. It has since clawed its way back to slightly above flat.
Wall Street tumbled on Friday, as an increased certainty around aggressive near-term rate rises took its toll on investors. It was the third straight week of losses for both the S&P 500 and the Nasdaq, while the Dow Jones Industrial Average posted its fourth weekly decline in a row.
Here is the morning market snapshot:
(Caroline Valetkevitch)
NASDAQ COMPOSITE: 2022 LOWS AT RISK (0900 EDT/1300 GMT)
In the wake of the market's back-to-back bruising at the end of last week, U.S. equity index futures are pointing to downside follow-through at Monday's open.
The Nasdaq Composite ended Friday down more than 20% from its November 2020 record close, and only around 2% from its March low at 12,555.35:
The March intraday low was just slightly below the Feb. 24 intraday low at 12,587.882, and essentially right at the 38.2% Fibonacci retracement of the entire March 2020-November 2021 advance, at 12,552.36. The IXIC's low close so far has been 12,581.22.
Thus, this appears to be a strong band of support. Additional support can be found at the March 2021 trough at 12,397.
In the event the IXIC tests, or violates its March 2022 lows, traders will be watching to see if the daily RSI, which ended Friday at roughly 30.00, can stabilize ahead of its late-January low at 16.599.
If so, amid elevated volatility, a bullish momentum convergence may then lead to a sudden, powerful upward reversal.
However, if this RSI trough gives way, the pattern may be forced to reset, which may then require a more protracted and deeper IXIC decline, before another positive convergence could then materialize.
The 50% retracement of the IXIC's March 2020-November 2021 advance is at 11,421.82.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)