S&P 500 (SPY) (SPX) Forecast: Amazon is lost in the jungle, but Apple bites bears back

S&P 500 stalls on Thursday as tech titans reported.
Nasdaq is the biggest loser, and more losses are likely on Friday.
PCE data could change everything, markets wait for confirmation of the Fed pause.

Ivan Brian FXStreet

Equity markets were shaky on Thursday and understandably so after a shocking earnings season from big tech. While the consumer cyclical stocks held up well, oil stocks were strong, and some promising signs from healthcare were noticed, all attention this week focused on big tech. Unfortunately, the news was less than stellar with some large losses.

S&P 500 (SPY) (SPX) (US500) news

Meta Platforms (META) collapsed, Alphabet (GOOGL) fell sharply, and then on Thursday hopes turned to Amazon (AMZN) and Apple (AAPL). Amazon was first out the door, and earnings were poor. Amazon Web Services (AWS) was a disappointment, and operating income too looked light. However, it was the forecast for the next quarter that caught my attention. Amazon forecasted revenue of $144 billion at the midpoint when the market had penciled in expectations for $155 billion. Amazon shares tanked 20% before a recovery to end the afterhours session down 13%.

Apple then was next up 30 minutes later. After Amazon, fears were high, so Apple drooped 5% at first. However, earnings were solid if unspectacular, and the stock recovered to close 1% higher. iPhone revenues are especially reassuring. On the conference call, Apple did not give guidance for the following quarter, which probably tempered some potential gains. It also said next quarter would decelerate, and FX would provide a 10% headwind.

All eyes will now turn to the PCE data before the market opens. The recent rally was set in motion by hopes for a Fed pause, which was reinforced by dovish central banks like the BOC, ECB and RBA. A high number will likely lead the indices to new lows for the year in my view. Earnings were solid on the consumer and cyclical side, but the big tech was overall very weak, and those are the largest weights in the main indices by far.

Oh yeah, and it looks like Elon Musk has a done deal with Twitter!

S&P 500 (SPY) (SPX) (US500) forecast

Textbook moves on Thursday back to support at 3,806. This now becomes my key pivot for the next move. Break there and I believe new lows for the year are likely. Hold and this rally can continue with 3,892 the first resistance. For SPY, the levels are 379 pivots and 389 for resistance in the second chart below.

SPX daily chart

SPY daily chart

Author

Ivan Brian

FXStreet

Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.

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