Stocks struggle to maintain momentum as earnings season impresses


Yet another week of strong earnings releases from the US, yet high expectations appear to be hindering the ability to maintain the ongoing uptrend. Meanwhile, the rise of both inflation and growth in the eurozone has dampened sentiment somewhat given the potential implications for monetary policy. 

  • Amazon declines drive US markets lower
  • Stocks struggle to maintain momentum despite impressive earnings season
  • Eurozone inflation and growth data puts the ECB into the limelight

The Nasdaq is leading the drive lower as we close out the week in a more pessimistic mood, with Amazon.com leading the declines. With traders selling Amazon stock despite a third consecutive $100 billion quarter, markets are clearly setting a high bar for these pandemic outperformers. Nonetheless, despite the high expectations for tech stocks, we have seen 94% of the S&P 500 tech earnings outperform on earnings thus far. Undoubtedly US earnings season has been a huge success thus far, with 89% outperforming on earnings, and 87% outperforming revenue estimates. Nonetheless, with the S&P 500 largely flat over the course of the week, we are seeing stocks struggle to maintain their upward trajectory given the expectations brought by the impressive figures already announced in previous weeks. 

While yesterday saw markets gain ground off the back of disappointing economic data out of the US, today has brought more impressive growth and inflation figures from the eurozone. Bigger-than-expected gains for both eurozone Q2 growth (2%) and inflation (2.2%) provides greater expectation that the ECB will seek to tout a more hawkish line going forward. With tapering a growing reality, we are increasingly seeing markets take on an inverse correlation where good economic data is bad for stocks.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD extends losses after robust US retail sales

EUR/USD is trading closer to 1.1750, extending its losses after US Retail Sales came out at +0.7% against -0.8% in August. ECB President Christine Lagarde said the economy is still not out of the woods. 

EUR/USD News

GBP/USD slides under 1.38 on robust dollar demand

GBP/USD is trading under 1.38, significantly lower after US Retail Sales beat estimates by rising 0.8% in August. The UK government reshuffle passed smoothly for the pound.

GBP/USD News

XAU/USD nosedives to the lowest level since August 13

Gold continued losing ground through the early North American session and dived to the lowest level since August 13, further below the $1760 region post-US macro releases. 

Gold News

Dogecoin killer Shiba Inu ready for new bull run

Shiba Inu gets listed on Binance.US, SHIB price recovers from the loss posted over the past week. The Shiba-Inu-themed token is one of the top 10 most mentioned cryptos on Twitter alongside BTC, ETH, DOGE, ADA.

Read more

AMC trades lower as CEO clarifies cryptocurrency payments

NYSE:AMC fell by 0.97% on Wednesday and lagged other meme stocks during the session. CEO Adam Aron clarifies which cryptos AMC will accept. High profile Hollywood directors are demanding longer theatrical windows.

Read more

Majors

Cryptocurrencies

Signatures