Nasdaq and S&P500: Tech Earnings Awaited as UPS Misses Forecasts

Market Update: Tech Giants in Focus as UPS Disappoints

U.S. stocks showed mixed performance on Tuesday as investors turned their attention to upcoming tech earnings. The Nasdaq and S&P 500 saw modest gains, while the Dow Jones Industrial Average faced pressure from disappointing results in the logistics sector.

UPS Drags Down Transport Stocks

United Parcel Service (UPS) plummeted 12.4% after missing earnings estimates due to weak package delivery demand and increased labor costs. This significant drop weighed heavily on the Dow Jones Transport Average, pulling it down 1.5%.

Tech Earnings Take Center Stage

Investors eagerly await quarterly results from tech giants Alphabet and Tesla, set to report after market close. These earnings will be crucial in determining whether the recent market rally can maintain its momentum. Alphabet shares rose 0.5%, while Tesla dipped 0.5% ahead of their reports.

Semiconductor Sector Faces Headwinds

NXP Semiconductors fell 7.2% after forecasting lower-than-expected third-quarter revenue. This negative outlook dragged down the Philadelphia SE Semiconductor index by 0.8%, highlighting ongoing challenges in the chip industry.

Mixed Results Across Sectors

While Coca-Cola raised its annual forecasts and saw its stock rise 1%, General Motors and Comcast both declined following their earnings reports. Overall, 81.1% of S&P 500 companies reporting so far this earnings season have beaten expectations.

Economic Data and Fed Outlook

Investors are closely monitoring upcoming economic releases, including the Personal Consumption Expenditures Price Index. This data will be crucial in assessing the Federal Reserve’s monetary policy stance. Currently, markets are pricing in a 92% chance of a 25-basis-point rate cut by September.

Market Forecast

The short-term outlook remains cautiously bullish, but much depends on the upcoming tech earnings. If Alphabet and Tesla deliver strong results, it could provide further fuel for the market rally. However, disappointing numbers from these key players could lead to a pullback, especially given the high valuations in the tech sector.

Technical Analysis

E-mini S&P 500 Index futures are trading slightly better as we approach the mid-session on Tuesday.  Traders are facing headwinds at 5631.75. Reaction to this level should set the tone into the close.

Since we’re in a strong uptrend, we’re not too worried about the upside. It’s managing risk that’s most important.

A failure to overcome 5631.75 will indicate the presence of sellers. If this generates enough downside momentum then we could see a test of the minor bottom at 5542.00 over the near-term, followed by the uptrending 50-day moving average at 5493.87.