Apple's Sour Earnings and Amazon's Sweet Surprise Shake Market

Over the past 24 hours, the technology market has been experiencing a story of two tales. Apple stocks declined by 2% after releasing their earnings data, while Amazon stocks climb 8.70%. Two types of sessions marked the stock market performance globally. The European session saw a significant “selloff” where most indices depreciated to renew lows. However, the US session saw investors purchasing at a discounted price. As a result, equities either ended slightly higher or formed a retracement. 

This morning, US equities are increasing in value ahead of this afternoon’s NFP data. The bullish price movement is partially due to the earnings data, but also due to rumors China will again release further fiscal stimulus to support the economy. However, traders should note that the volume during this morning's Asian session is lower than the previous days. Volume per 10 Minutes over the past days for the SNP500 ranged between 150 and 750 contracts. At the same time, this morning’s volume rose no higher than 400 contracts. 

The US Dollar Index declined from 102.68 yesterday to 102.38 this morning in the currency market. However, investors should note the Dollar remains above previous price ranges from Monday, Tuesday and Wednesday. The Pound witnessed a robust bullish price movement after the Monetary Policy Committee’s votes were made public. When the decision was released to hike 0.25%, the Pound sharply declined. However, the BoE then confirmed that 6 members voted to hike 0.25%, 2 members to hike 0.50%, and only 1 voted not to hike. The Pound appreciated as the votes were more hawkish than in previous months. 

However, many analysts are still determining if the Pound can hold onto gains while the economy is at such a high recession risk. The interest rate on a two-year fixed mortgage is now 6.85%, compared with 3.95% last August. Experts advise that mortgage lending and interest rates will continue rising, which will pressure the economy.

GBP/USD 30-Minute Chart on August 4th 

SNP500 

The SNP500 ended its third day on consecutive declines but rose towards the end of yesterday’s session. The SNP500 is also increasing in value during this morning’s futures market by 0.30%. Order Flow indicates that buyers are currently controlling the market regarding orders. However, sell orders have slightly risen as we approach the European open. The main driver will likely be the earnings data from Apple and Amazon and this afternoon’s employment data. 

Eight of the top ten influential stocks within the SNP500 have increased in value during yesterday’s session, paired with the after-hours price movement. The only stocks from the top 10 that have declined are Apple stocks and Meta. However, investors should note that Apple holds the highest weight among all components. Therefore, if the selloff accelerates, it can have a significant impact. From the stocks which hold a “weight” within the SNP500 of more than 0.50%, 33.3% ended the day lower. 

Apple’s quarterly earnings data had positive and negative aspects to the report. The company’s Earnings per Share was 5% higher than analysts’ expectations and Revenue expectations were accurate. However, the main negative factors were the sales performance of certain products, whereas services grew by 8%. iPhone sales were 2% lower than estimated, Mac revenue 7% lower, and iPad revenue almost 20% lower.  Whereas, Amazon’s earnings per share was 85% higher than expectations and revenue 2.30% higher. As a result, Amazon stocks rose by almost 9%. Amazon is currently the third most influential stock within the SNP500 and bears a weight of 3.03% compared to Apple’s 7.54% weight. 

SNP500 30-Minute Chart on August 4th 

Regarding technical analysis, the price action indicates a downward trend with a current retracement forming. However, if the bullish price movement rises above $4,528, the asset will likely obtain a bullish signal indicating a rise back to previous highs. A decline below $4,499 will indicate the continuation of the downward trend. Investors should note that volatility will increase as the US releases its employment data for July.

US Employment Data

The Weekly Unemployment Claims yesterday remained stable, similar to previous weeks, indicating no significant change to the employment sector. Analysts believe the Average Hourly Earnings per hour read slightly lower at 0.3%, the Non-Farm Payroll to remain the same as the previous month and the unemployment rate at 3.6%. If employment data reads higher than expected, investors will believe inflation will remain above the Fed’s target, and the regulators may opt for another rate hike. Therefore, higher-than-expected data can potentially pressure the stock market and support the US Dollar. 

Summary:

• If employment data reads higher than expected, investors will believe inflation will remain above the Fed’s target, and the regulators may opt for another rate hike.
• Apple stocks declined due to the poor performance of certain products, whereas Amazon increased by almost 9%. 
• Amazon’s earnings per share were 85% higher than expectations, and revenue was 2.30% higher.
• The Pound increased in value after the Monetary Policy Committee took a more hawkish stance. Two members of the MPC voted to hike by 0.50%.