As the earnings results of mega-cap tech companies approach this week, investors brace themselves for a potential shift in market sentiment. High-interest names like Alphabet, Microsoft, Amazon, and Meta are set to announce their first-quarter results, which could sway market trends.

Investors will closely watch the economic data, which will determine whether inflation is cooling down or if another rate hike is in the cards during the next meeting of the Federal Reserve in May. Over the next seven to ten days, US GDP numbers for Q1, consumer sentiment data for April, and other economic indicators will be released.

Despite growing economic concerns, the market has been relatively peaceful, with the S&P 500 comfortably above the key 4,100 level and the VIX within the 17 range. However, this upcoming week of earnings releases could mark the beginning of a potential market pullback.

Investors will also keep an eye on First Republic Bank's first-quarter earnings report on Monday, which will provide insight into the extent of the damage after sharp deposit outflows at the troubled bank, at the centre of a crisis of confidence in midsize and smaller US banks.

Despite the looming concerns of stubbornly high inflation, the market has already factored in an expected 25 basis point interest rate hike at the May Fed meeting. The general consensus among investors is that the upcoming hike will also mark the end of the Fed's monetary tightening path.

Although the Fed rate hike has slowed down the economy, certain aspects of the economy still appear robust. Nevertheless, the data is expected to cause uncertainty and volatility, and there is a likelihood that the Fed will implement another rate hike.

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