In the aftermath of a whirlwind week packed with earnings reports, the FOMC meeting, and significant economic data releases, investors are poised for a breather.
This week marks a slowdown in the earnings season, with 80% of S&P 500 companies having already reported. Attention now turns to Nvidia’s impending report on May 22nd, with economic data set to be relatively light for the week ahead.
Despite recent intraday volatility, the S&P 500 managed to notch gains, rebounding from a 5% correction and edging closer to its 50-day moving average.
The index now sits at a key inflection point, according to Freedom Capital Markets (NASDAQ:FRHC) chief global analyst Jay Woods.
“Can the index recapture this level and work back to its highs at 5264 or will we stall and pull back towards its 100-day moving average?” Woods asks in his weekly newsletter.
“Given the lack of major catalysts this week a pause is more likely.”
Woods notes similar technical patterns in the Dow Jones Industrial Average, indicating a potential pivot point in the markets.
“As I always say, sideways is a direction and we suspect that to be the direction of the markets for the coming weeks,” Woods writes.
Amidst this, investors closely analyze the Federal Reserve’s stance on inflation, dissecting Chairman Jerome Powell’s recent remarks suggesting a patient approach, though leaving room for uncertainty regarding future rate hikes.
Earnings trends remain a focal point, with FactSet data revealing a 5% earnings growth rate for the first quarter, marking the highest since the second quarter of 2022. However, amidst these developments, the age-old adage of “Sell in May and Go Away” comes under scrutiny, as historical trends clash with recent market behaviors, challenging conventional wisdom.
Looking ahead, investors turn their attention to key earnings reports from major companies like Disney, Palantir, Robinhood, Arm Holdings, and Roblox. Disney’s report on Tuesday gains particular attention following recent market fluctuations and shifts in consumer spending habits, while AirBnB and Arm Holdings face anticipation and scrutiny in the wake of their upcoming quarterly results.
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