S&P 500 Forecast: Earnings to steal focus this week with Tesla, Netflix, Bank of America on lock

The S&P 500 will follow up last week's snoozefest with a real banger of a week. The first flood of companies report their first quarter earnings this week, and nearly every session will hinge on the bottom line figures coming in. Goldman Sachs (GS), Morgan Stanley (MS) and Bank of America (BAC) will join other large banks who reported last Friday, and if that does not excite you then Tesla (TSLA), Netflix (NFLX) and Taiwan Semiconductor (TSM) surely will. 

Last week saw few events of any importance until Friday witnessed a rash of major money-center banks reporting. Though the figures from the likes of JPMorgan (JPM) and Wells Fargo (WFC) delighted the market, the S&P 500 ended lower on poor March retail sales. Still the S&P 500 advanced 1.5% on the week.

At the time of writing, NASDAQ 100 futures and S&P 500 (SPX) futures are slightly ahead in the Monday premarket.

S&P 500 news: Earnings galore

Friday was just a dress rehearsal for this week. The four major banks that reported at the end of last week all beat Wall Street earnings expectations, and now the market seems to think the banking "tremor" from March may not be a systemic problem after all. This week will prove which opinion is true with many still thinking regional banks will report a tough quarter. Already the regional M&T Bank (MBT) has reported results that beat consensus on both top and bottom lines on Monday morning. Tuesday's report from Western Alliance Bancorp (WAL), one of the banks that plunged alongside First Republic Bank (FRC) in March, may set the week's sentiment for regional banks, although Bank OZK (OZK) on Thursday will also be closesly watched.

On the tech front, Netflix is expected to post earnings this Tuesday showing GAAP earnings per share (EPS) of $2.86 on revenue of $8.18 billion. 12 of 19 earnings revisions over the past quarter have been downward. The streaming company received poor fanfare over the weekend when its Love is Blind reunion episode had to be delayed over technical difficulties.

On Wednesday, Wall Street expects Tesla to post GAAP EPS of $0.75 on $23.38 billion in sales. Fourteen of 16 earnings revisions over the past quarter have been downward.

US housing will be a market mover on data front

March housing starts and building permits will both be reported on Tuesday. Wall Street expects 2.2 million building permits and 1.4 million housing starts. Housing has been expected to slow dramatically due to the Federal Reserve's interest rate hikes, but strong demand for housing seems to be holding up the industry for now. On Thursday, the market expects existing home sales to arrive at 4.94 million for a 1.5% MoM growth rate.

Unemployment data will also arrive on Thursday.

Earnings of the week

Monday, April 17 - Charles Schwab (SCHW), M&T Bank (MTB)

Tuesday, April 18 - Netflix (NFLX), Bank of America (BAC), Goldman Sachs (GS), Western Alliance Bancorp (WAL), Bank of New York Mellon (BK), Lockheed Martin (LMT) and Johnson & Johnson (JNJ) 

Wednesday, April 19 - Tesla (TSLA), Morgan Stanley (MS), US Bancorp (USB), Discover Financial (DFS), Ally Financial (ALLY) and Citizens Financial Group (CFG) 

Thursday, April 20 - AT&T (T), Union Pacific (UNP), CSX Corporation (CSX), Philip Morris (PM), Taiwan Semiconductor (TSM), American Express (AXP)

Friday, April 21 - Procter & Gamble (PG), Regions Financial (RF)

S&P 500 quote

Mike Wilson, chief equity strategist and CIO at Morgan Stanley, wrote in a note to clients that the percentage of stocks outperforming the S&P 500 on a three-month rolling basis is the lowest on record:

"[This] is the market’s way of warning us we are far from out of the woods with this bear market."

S&P 500 technical analysis

The S&P 500 index is still stuck within the 4,100 to 4,200 resistance range that pushed prices to slide back in late January. The index has not made it above 4,200 since August of 2022 – about nine months ago. The index ended Friday at 4,137. Now seems like a good time on the chart to sell the S&P 500, but Friday's solid earnings run may have given bears second thoughts. An impressive week of earnings may even push bulls to make a run at last August's high at 4,325. Other traders look at the recent retail spending data and conclude non-banks may be more likely to report worse earnings and outlooks. In a worst case scenario, a break this week of 4,100 would place the index on its way toward the 30-week moving average, which is now at 3,927. 

The Moving Average Convergence Divergence (MACD) indicator is moving in the right direction but appears a bit timid of late. It is as if traders want a rally but expect their hopes to dissolve once again. 

S&P 500 weekly chart