S&P 500, Nasdaq 100 – Wall Street Indexes Eye Further Gains as Earnings Filter Through

• Wall Street indexes showed positive momentum, driven by strong bank earnings reports.
• Tech sector earnings, expected later in October, could further boost US indices.
• S&P 500 technical analysis suggests potential bullish continuation with key resistance levels identified.

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The major Wall Street Indexes took a breather this morning following a stellar rally yesterday. The Dow Jones Industrial Index touched the 43000 handle for the first time while the S&P and Nasdaq 100 both continued to advance as well. The Nasdaq 100 continues to lag its peers however and still remains around 300 points of its all time highs of 20790. 

Earnings season got underway last week with major banks JpMorgan Chase JPM.N and Wells Fargo WFC.N both posting surprisingly positive results. This week however steps things up a bit with 41 S&P 500 companies scheduled to report earnings, which could stoke a lot of volatility in US indices. 

Earnings from Bank of America today were not as upbeat as some of its peers but the share price has recovered from an initial drop to trade in green for the day. Goldman Sachs and CitiGroup however smashed estimates with their earnings releases which could be the reason for the recovery in US indexes this morning. Johnson and Johnson were another name that beat estimates on both profits and sales forecasts as well as the expectations by Wall Street.

On the flip side, Oil stocks were lower today as Crude Oil prices plummeted on hopes that supply disruptions in the Middle East would not materialize. Exxon Mobil XOM.N, Occidental Petroleum OXY.N, and Chevron all falling between 2.5% and 3% on the day.

It has been an interesting start to earnings with the banks surprising thus far. Given that markets are expecting the Technology and Communication sectors to boom and post their largest YoY growth, this could set up US indices for further gains. The tech heavyweights are scheduled to report toward the backend of October and thus could propel US indexes higher just before the US election. 

This is intriguing to say the least given that markets do usually experience a ‘Santa Rally’ in December meaning that US Indices could continue their upward trend heading into 2025.  

NAS 100 Early Session Heatmap

Source: TradingView.com (click to enlarge)

Looking ahead to the rest of today’s session, US data is sparse. All earnings releases are also out of the way with nothing scheduled after market close which shifts the focus to comments from Federal Reserve policymakers.

On the docket we have comments from Fed policymaker Mary Daly and Adriana Kugler which may provide further insights into policy making heading into the November meeting and beyond. Barring any surprise comments I do not expect any material change to market expectations around the upcoming Fed meetings.

Technical Analysis 

S&P 500

From a technical standpoint, the S&P is continuing its long term move to the upside. For those who have followed my previous articles, the S&P 500 broke out of a triangle pattern a few weeks back. As technical patterns go, the potential targets following the breakout rest around the 5910 handle 6169 handle with the index reaching a fresh high of 5872 yesterday.

However, given the amount of movement we have already had the opportunity for would be bulls to get involved may be gone by now. There is a possibility of getting one or two small scalps in before the index reaches its first potential target at 5910.

A break above the 5910 handle will lead to a run toward the psychological 6000 handle which could prove a stubborn stumbling block. This could mean that a retracement may take place before the index makes a run for the 6169 handle.

S&P 500 Daily Chart, October 15, 2024

Source: TradingView (click to enlarge) 

Support

• 5757
• 5669
• 5613

Resistance

• 5913
• 6000
• 6169

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