- Nasdaq index gains 1% on the day as investors await tech giants’ earnings.
- According to analysts, the recent gains are short-lived.
- Technically, the index remains capped by a 20-period SMA.
Technology stocks gained 1% on the Nasdaq Composite. S&P 500 gains were broad-based, with 10 of the 11 sectors rising. Communication services were the only group to lose ground.
In response to earnings reports, inflation concerns, and the prospect of quick Federal Reserve policy tightening, the Nasdaq plunged its most significant percentage drop since September 2020 on Tuesday, while the Dow plummeted by more than 800 points.
Over the year, the major US stock indices declined significantly: the S&P 500 fell 12%, and the Nasdaq Composite fell 20%. Tuesday’s Nasdaq closing price was the lowest since December 2020, wiping out gains made in 2021. Likewise, Tuesday, the Russell 2000 Small Cap Index closed at its lowest level since December 2020.
On Wednesday, the move higher was viewed as more than a temporary recovery rally.
Tracey McMillion, head of global asset allocation strategy at Wells Fargo Investment Institute, stated, “I think investors are finding value in current prices because shares have been so weak.”
According to Seema Shah, chief strategist at Principal Global Investors, she sees the next stock market move either sideways or downward.
Despite the gains, Ms Shah said she doesn’t believe they will be sufficient to keep the market afloat. She said that the team is now recommending a neutral recommendation for the overall stock position.
“The risks only compound over time,” she said. For example, pennies should not be collected before the ice rink.
The likes of Facebook parent Meta Platforms and Ford are expected to report earnings after Wednesday’s close.
FactSet data shows that nearly 80% of S&P 500 companies’ reported earnings have beaten analyst expectations. Nevertheless, Emily Roland, co-chief investment strategist at John Hancock Investment Management, said investors remain focused on several broad issues affecting markets.
Nasdaq technical analysis:
The Nasdaq index price forms a bllish pin bar candle after recovering from below the 13,000 level. The index is still below the 20-period SMA. It is important to watch if the index can break the level or not.
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