Apple Saves Markets Despite Big Tech Earnings

circle-st-icon

Alex Partida

Oct 28th 2022  .  3 min read

Market rallies on the back of Apple

Multiple big-tech earnings reports, including Amazon (AMZN), hammered the markets Thursday after the closing bell. The Nasdaq tumbled and brought the S&P 500 down with it. The market reacted to Amazon not only missing earnings per share, but also net sales numbers. Amazon was expected to see a figure close to $155.52B but fell short, revealing an underwhelming $140B.

Apple (AAPL) was the next to report and arguably saved the market. Apple’s earnings reports came in strong, beating earnings per share (EPS) and revenue by 1.44% and 1.55% respectively.

When Friday’s opening bell rang, Apple quickly established itself as a leader and pushed higher through multiple key levels. The S&P 500 was quick to follow, breaking through it’s 50-day simple moving average (SMA) at 3,850. Traders knew if price maintained this level that the sky was the limit. All eyes were set on 3,900 in the afternoon session. The markets quickly probed 3,900, broke through, and stayed above until the close. 

Gauging continuation 

Today’s rally was a display of pure strength. One of the best indicators that this strength would continue into the afternoon was the volatility index (VIX). The VIX is a forward-looking indicator that attempts to predict variability in the market. 

When VIX is falling off a cliff the way it was today, it indicates that the market makers do not fear downside movement at this given moment. The next indication would be to look at Apple itself. When you have a clear leader in the market, using this stock as a gauge can help indicate the slowing of the market. In today’s case, Apple refused to slow down or turn around. 

Powell returns next week.

Next week is already lining up to be an interesting one. The Federal Open Market Committee (FOMC) will host a press conference on Wednesday at 2 pm Eastern. Federal Reserve (Fed) Chairman Jerome Powell is set to speak shortly after at 2:30 pm. Whenever Powell takes the podium, the market listens. Generally, Fed speakers significantly impact the market, but none more than Powell.

Interest rate hikes will be the big talk of the week. Markets are pricing in another 75 basis point hike in the benchmark interest rate. In a scenario where the hike comes in higher than 75, and the Fed reveals a 100 basis point hike, the market may panic. 

The stock market closes the week strong

The Nasdaq and the S&P 500 futures were positive to close the session. The S&P 500 futures closed up 2.66%, gaining 101 points, while the Nasdaq futures closed up 3.36%, a gain of 376 points. The Dow futures followed, closing up 2.79%, adding 899 points.