What Should Investors Expect from the S&P 500 In the Next Week?
March 21 2022 - 5:45AM
Finscreener.org
The Federal Reserve increased
interest rates last week and market participants are closely
watching to see if equities can continue the upswing experienced
recently. An impressive rally in technology and growth stocks meant
major indices such as the S&P
500, Nasdaq,
and Dow
Jones gained 6.2%, 8.2%, and 5.5% respectively in the week
ended on March 18, 2022. It was the best week for stock market
investors since 2020.
Now, the U.S. stock futures were
holding steady in overnight trading on Sunday as the S&P 500
futures were up by a marginal 0.04% while the Dow Futures gained 15
points.
Investors expect the stock market to
stabilize
After a better-than-expected
performance in the last week, is it possible for the stock market
to sustain momentum going forward? According to historical data,
April has been one of the best months for equities which should
cheer investors.
The S&P 500 has already
recouped around half of its losses in the last few trading sessions
even as the Fed signaled multiple interest rate hikes are on the
cards. While major indices might be rangebound in the near term,
the upcoming earnings season will be the next key driver of stock
prices.
Despite a volatile
macro-environment, earnings forecasts for companies have increased
since the start of 2022. The ongoing war between
Russia and Ukraine
will continue to weigh heavily on
markets as oil prices are trading close to all-time highs. While
the officials of the two countries continue to meet for peace
talks, they have failed to progress towards a consensus.
Finally, the increase in the
number of COVID-19 cases in Europe, Hong Kong, and China is bound
to exacerbate supply chain disruptions driving inflation numbers
higher in the near term.
Will gold prices move higher?
Generally, gold prices have an
inverse relationship with the stock market. Viewed as an alternate
asset class and a store of value, gold spot prices rose to record
highs in September 2020 as investors were worried about the impact
of the ongoing pandemic. However, prices have fallen by more than
15% in the last 18 months and experienced their biggest weekly drop
in nearly four months last week.
Bullion was down close to 3% in
the past five days on the back of higher interest rates and
optimism over peace talks that improved market sentiment and
lowered demand for safe-haven assets. As the central bank is on
track to raise interest rates by five more times in 2022, it will
raise the opportunity cost for holding non-interest paying assets
such as gold.
Alternatively, Standard Chartered
analyst Suki Cooper explained the hawkish outlook of the Federal
Reserve should not derail the positive sentiment surrounding
bullion as geopolitical risks have raised inflation concerns
driving long-term interest for gold.
Copper stated, “While the
physical market has come under pressure, growth in investor
interest has more than offset this weakness for now, suggesting
that volatile price action is here to stay.”
Nike and Adobe among S&P 500 giants to report
earnings this week
There are several companies part
of the S&P 500 index which will report earnings this week.
Retail giant Nike (NYSE: NKE) will
report its fiscal Q3 of 2022 results, ended February, on Monday.
Analysts expect Nike to increase sales by 2.4% year over year to
$10.6 billion while adjusted earnings might fall by 21% to $0.71
per share in Q3.
Valued at a market cap of $214
billion, Adobe (NASDAQ: ADBE)
will is forecast to increase sales by 8.7% year over year to $3.9
billion in fiscal Q1 of 2022 ended in February. Comparatively, its
adjusted earnings might rise by 6.4% to $3.34 per share in
Q1.
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