NASDAQ Rollercoaster, Tech Earnings Drive Market

As mentioned throughout the week, investors' attention remains fixed on NASDAQ and technology companies' earnings. The US stock market saw a mixed performance throughout yesterday’s trading session as traders experienced a renewed high and a sudden collapse. In addition to the current earnings releases, the market also closely followed the release of yesterday's Purchasing Managers Index.

NASDAQ Hits a 6-Week High

The price of NASDAQ saw its high volatility continue for a third day. The price initially increased in value by 1.09% after the market opened. This was again higher than the bullish price movement experienced on the SNP500 and Dow Jones. The Dow Jones increased by 0.89% after the market opened and the SNP500 by 0.53%. However, the price significantly declined in the last 1-hour of the US Trading Session. 

The NASDAQ declined by 1.42% in the last hour of trading and ended the day at a lower price compared to the US open price. The decline can be related by day and swing traders cashing in profits as the day’s trading comes to an end. In addition, traders may be looking to exit the market as Tesla’s earnings report edges closer. As mentioned yesterday, economists have concerns regarding the performance of Tesla over the past quarter and the stock’s general performance.



NASDAQ 30-Minute Chart on January 25th


Investors are experiencing neutrality when looking at technical analysis. For example, many oscillators such as the Relative Strength Index are hovering around the 50.00 mark. So, we can see here that the oscillators indicate the price can move in either direction. However, traders should note that currently, the price is still within the trend zone of regression channels which indicates a bullish trend is still possible. However, this may change if the decline gains momentum or crosses to a lower low. 

On a last note, the index may be supported by the latest Purchasing Managers Index, which was better than expected for the US. The US Flash Manufacturing PMI and Services PMI increased compared to the previous announcement. The Manufacturing PMI read 46.8 which is 0.8 higher than its predictions. The Services PMI read 46.6 and is 1.3 higher than expected. The announcements are positive but remain below 50.0 which is a concern for investors. 

Tech-Company Earnings

It should be noted that company earnings are certainly going to influence the price movement of NASDAQ, specifically tech companies. Microsoft is the latest company to release its earnings which were slightly better than expected. The company’s Earnings Per Share read $2.32 compared to the expected $2.29. The productivity and business processes figure read $17 billion compared to the expected $16.8 billion. 

Both figures were positive and had triggered some bullish price movement. However, investors are slightly concerned that revenue was slightly lower than expected and cloud growth continues to decline. Investors now await Tesla’s earnings report.

Apart from Tesla, Alphabet is also expected to release their earnings report next week. Wall Street has advised they expect the company’s revenue will hit $76.6 billion which is almost 10% more than the third quarter. The Earnings per Share is also expected to rise from $1.06 to $1.18. 

DAX

The German DAX saw one of the strongest bullish trends throughout January but has lost momentum over the past week. The bullish trend has been fueled by stability within the Eurozone and a lower risk of recession. This is a very different picture compared to 2022. Though economists advise that investors are not considering a further 1% hike over the next 2 months.

The latest German IFO Business Climate report indicates an improved economic outlook within the EU. The report is again based on surveys, similar to the PMI, but is based on different sectors within the economy. The report read 90.2 which is the highest in 7-months. In addition to this, yesterday’s German PMI reports improved compared to the previous month. 

For more information on the price movement of the DAX and technical analysis, check out our latest video below. 
 

DAX Technical Analysis

Summary:

• NASDAQ renews its highs but comes under pressure as the market comes to a close. 
• Microsoft releases its latest earnings report. Investors now turn to Tesla and Alphabet. 
• Microsoft is the latest company to release its earnings which were slightly better than expected.
• DAX loses momentum, but the EU economic outlook remains positive and better than in 2022.