Bracing for Volatility: A Market-Moving Week Is Here


Joseph Rangel

Jan 30th 2023  .  3 min read

Bracing for Volatility: A Market-Moving Week Is Here

The market opened lower, with the S&P 500 futures testing the key level of 4,100, but faced resistance from sellers. This led to further profit-taking and sent the market down 1% in today’s session, following a solid close at the end of the previous week.

Market participants are closely watching several major events that are set to take place this week, which could impact the market’s direction. These events, including economic data releases and earnings reports, are closely watched by investors and traders, and any important news or data could cause a shift in market sentiment. The market is anticipating these events, and the outcome could either confirm or alter the current market trend entirely.

Selling Continues As Market Opens

After the opening bell sounded, there was a steady decline in the S&P 500 futures as they market trickled lower. Today was far from a sell-off and would be better described as a take-profit day. The story stayed the same from the opening to the closing bell, a slow move lower as the market gears up for a big week.

Earnings and Fed Talk Expected to Bring Volatility

When you mix a week of earnings in large technology stocks with a highly anticipated rate hike announcement, uncertainty in the market rises rapidly. As institutions and big money on Wall Street begin to prepare themselves for possible outcomes, volatile fluctuations can be expected. 

First to report earnings is Advanced Micro Devices (AMD), after the bell on Tuesday. Their earnings will affect the Nasdaq and, more specifically, other semiconductor stocks such as Nvidia (NVDA) and Qualcomm (QCOM). Recently the sector has been strong, and solid reporting can help the momentum continue.

Fed Takes Center Stage on a Data-Filled Wednesday

On Wednesday, the market is set for a busy day with a deluge of economic data releases and a highly anticipated announcement from the Federal Reserve. The day will kick off with the release of the Advanced Data Processing (ADP) national employment report at 8:15 a.m. Eastern, followed by the S&P U.S. manufacturing Purchasing Managers Index (PMI) at 9:45 a.m. and the Institute for Supply Management (ISM) at 10 a.m. The biggest catalysts of the day will be the Federal funds rate announcement at 2 p.m. and comments from Fed Chairman Jerome Powell at 2:30 p.m. The day will end with the release of Meta Platforms Inc.’s (META) earnings report, which is expected to bring more volatility to the market after the close.

With all the major events happening this week, market participants will pay close attention to the results and how they affect individual stocks and the market as a whole. The combination of earnings, economic data, and Fed announcements will contribute to increased volatility, making investors aware of each catalyst and how it fits into the larger market landscape. Options markets will reflect this uncertainty, with implied volatility likely to rise and underlying options trading at higher premiums.

Profit-Taking Leads to a Red Close

The Nasdaq and the S&P 500 were negative to close the session. The S&P 500 futures closed down 1.30%, losing 52 points, while the Nasdaq futures closed down 1.98%, declining 229 points. The Dow Jones futures followed, closing down 0.78%, decreasing 264 points.