S&P 500, Dow Jones & Nasdaq 100 Price Outlook:
- Earnings season begins with reports from the country’s largest banks in the second full week of July
- A commonality in every sector is the considerable threat posed by coronavirus
- Consequently, many companies have suspended their forecasts, leaving a wide range of market expectations
S&P 500, Dow Jones & Nasdaq 100 Forecast: Earnings Season Arrives
The second full week of July marks the beginning of earnings season, a period that is likely to inject volatility into single shares and potentially entire indices. After coronavirus eviscerated prior earnings guidance, market participants have been thrust into unfamiliar territory, heading into the season with an array of expectations. With such a unique economic backdrop, it seems the possibility of a divergence in expectations from reality is high – a framework that might create wild swings in market sentiment.
Nasdaq 100 Price Chart: 4 – Hour Time Frame (April – July)
As I recently noted, the Nasdaq 100 trades near the top of an ascending channel, a range that has kept the tech-heavy index in check for three months. With event risk on the horizon, abrupt shifts in sentiment could have dire consequences for a seemingly vulnerable index. Coupled with the recent addition of the Shanghai Composite, the Nasdaq has been at the forefront of speculative risk appetite, so upcoming reports from the likes of Apple, Facebook, Microsoft, Amazon and Google could directly influence entire equity markets due to their influence over investor sentiment.
Whatever the season eventually reveals, it can be argued the coming reporting period has few historic parallels. In turn, market participants in search of volatility might thrive in the coming weeks as an upturn in volatility is within reason. With that in mind, be sure to check back at DailyFX for earnings-related content from a macroeconomic point of view as the season progresses.
Recommended by Peter Hanks
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–Written by Peter Hanks, Strategist for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX