Nasdaq Index, Dow Jones, S&P 500 News: End Month Lower with Tech Traders Eyeing AMD After Bell

Highlights

• Dow, S&P 500 set for third consecutive negative month.
• Caterpillar, Pfizer report Q3 earnings with mixed results.
• AMD reports after the close; Could shake up Nasdaq with a miss. 
• All eyes on Fed’s upcoming interest rate decision.

Market Recap and Earnings Season Woes

Stock futures displayed a lukewarm sentiment on Tuesday, marking an uninspiring end to an October fraught with volatility.

The S&P 500 managed a partial recovery on Monday, but Wall Street remains cautious. The Dow Jones and S&P 500 are set to conclude their third consecutive negative month, a streak not seen since March 2020. Meanwhile, the tech-centered Nasdaq is down over 3% for the month.

Interest Rates and Economic Indicators

While the market continues its lackluster performance, all eyes are on the Federal Reserve’s upcoming interest rate decision. Current futures pricing indicates a 98% likelihood that rates will remain unchanged.

This week also brings October’s payrolls report, which could provide critical insight into the labor market’s health.

Tuesday’s Employment Cost Index for Q3 exceeded expectations, showing a 1.1% increase and adding to concerns about inflationary pressures.

Earnings Before the Bell

Caterpillar, which reported Q3 earnings before the bell, exceeded estimates but subsequently lost early gains. The company’s warning about its Q4 revenue being only “slightly” higher year-over-year rattled investors.

Pfizer also reported before the bell, revealing a narrower Q3 loss but taking a hit due to write-offs related to its Covid-19 treatments. Both companies saw their shares decline in premarket trading.

Earnings After the Bell

Notably, AMD is set to disclose its Q3 results after Tuesday’s close. Despite uncertainties in cloud service providers’ spending, the chipmaker is expected to report a YoY decrease in earnings and revenue. However, analysts remain predominantly bullish on AMD, with Wedbush Securities’ Matt Bryson highlighting the chipmaker’s consumer PC shipments as a potential growth driver.

Short-Term Outlook

The market’s short-term outlook remains bearish. Inconsistent earnings reports, combined with looming economic indicators, have cast a shadow over market sentiment. While interest rates are likely to remain stable for now, the combination of subpar corporate performance and rising compensation costs suggests continued market uncertainty. Keep a close eye on AMD’s post-bell report, as it could serve as a bellwether for tech stocks.

Technical Analysis

The current daily price of the S&P 500 at 4166.83 is below both the 200-day moving average of 4241.16 and the 50-day moving average of 4357.48. This indicates a bearish sentiment in both the long-term and short-term perspectives.

The index has managed to rise above the previous daily close of 4117.36 but is still struggling below minor resistance at 4197.68 and main resistance at 4261.72.

Given these technical indicators, the current market sentiment leans bearish, suggesting that the index may continue to face headwinds in the near term.