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Earning reports and rate hikes affect the SNP500
22.07.2022

The SNP500 has increased in value for 5 consecutive trading days and is on track to form a bullish weekly candlestick. The price is currently hovering at the price of $3,995.10 which is the highest the index has reached since early June. The price of the index still remains relatively low compared to the previous months, though bullish traders have gained control of the market this week.

Bullish momentum has mainly been gained due to the latest earning reports released over the past week. However, analysts are also evaluating how the market may react to the expected hike in interest rates scheduled for next Wednesday. Let's take a look at one of the main developments.

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Exxonmobil has been predicted to be one of the most successful companies in the latest quarter. The management of ExxonMobil has already advised that the operating profit from the extraction of Oil as well as Gas will amount to more than $10.0 Billion; the production of gasoline and diesel fuel to $4.5 Billion and about $2.0 Billion is expected from the production of chemicals and motor oils.

Economists have advised that the earnings per share will reach $4.02, but experts fear that the end of the year will not be so successful for the company due to signs of a global recession. At the same time, the consumption of petroleum products in the USA, the EU and in China may decrease due to a reduction in economic activity caused by high prices and tightening monetary policy.

In addition to the above the price is mainly being influenced by earning reports which have already been released. This includes Tesla, PhilipMorris and Netflix. So far all three have experienced significant growth.

Though we are in the middle of the earning season and the investors’ attention firmly remains on the earning reports, it is also vital to not neglect the scheduled increase in interest rates. The fund rate is predicted to increase by 75 basis point or even 100 basis point which will take the Federal Fund Rate to 2.75%.

The increase in interest rates aims at lowering consumer demand and consequently, lowering inflation. However, this is also known to reduce disposable income as well as investor confidence. It is for this reason why traders will want to ensure that the rate hikes will not damage the performance of the stock market.

In the coming days, the market will be awaiting the release of Apple’s, Google’s and Microsoft’s earnings reports.

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