Earnings Reports and Tech Layoffs Cause Chaos

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Alex Partida

Jan 25th 2023  .  3 min read

Earnings Reports and Tech Layoffs Cause Chaos

The market was riding high after Microsoft Corp’s earnings report, but the good vibes were short-lived. Negative forward guidance sent the market spiraling down, and the Nasdaq took the biggest hit. Investors watched as gains evaporated and the mood on Wall Street turned sour.

Microsoft’s earnings report was on target, but negative forward guidance dampened market sentiment. Pre-market trading was further affected by news of layoffs across the economy. While tech giants such as Google and Amazon have recently announced layoffs, now other sectors are beginning to follow suit. 3M reported that manufacturing jobs would be hit hard by a declining consumer market and Covid-related issues in China. 

Early Selling Guides Market to Liquidity 

When the market opened, the S&P 500 futures briefly rose, but the resistance at 4,000 was too strong. This caused the market to drop. Buyers started to return at the 200-day simple moving average (SMA) at 3,970 and the 21-day exponential moving average (EMA) at 3,960. This area is crucial for support to maintain the recent rally. 

Not only did the market stop its decline but it also quickly regained bullish momentum, saving the overall market sentiment. If the market stays above the 21-day EMA, it is possible to maintain a bullish outlook. The market is currently in a positive state, and investors will be watching to see if this trend continues.

Buyers took control of the market and sent the indices soaring after the initial sell-off at the opening. The resistance at 4,000 was tested again, but this time the market had enough buyers to push through and continue its upward movement. Despite the session closing in negative territory, the recovery was impressive. The market is now waiting for the highly anticipated earnings report from Tesla Motor Company (TSLA). 

Bulls Signify Strength in Strong Recovery 

One notable trait in today’s price action was the ability to recover to the magnitude that the market did with every reason to sell off. When a negative catalyst, or two in today’s case, can be overcome, it shows who controls the market – the bulls.

Tesla Beats EPS and Sales Estimates

TSLA provides a mixed reaction as the earnings report reveals a beat in the EPS and Revenue numbers. Expectations for EPS were $1.12, and the actual showed $1.19. Revenue was expected to come in at $24.07B, and the actual number came in at $24.32B. Some other report notes include that the Cybertruck is on track to begin production later this year. Numbers came in sound, but investors are still digesting the news as the reaction has been flat. 

Tomorrow will contain the weekly Initial and Continuing Jobless claim numbers to be released at 8:30 a.m. Eastern. 

Wild Recovery Ends Flat

The Nasdaq and the S&P 500 were negative to close the session. The S&P 500 futures closed down 0.03%, losing 1 point, while the Nasdaq futures closed down 0.22%, declining 25 points. The Dow Jones futures did not follow, closing up 0.02%, an increase of 5 points.