Markets Flat As Earning Season Starts


Joseph Rangel

Jan 24th 2023  .  3 min read

Markets Flat As Critical Earning Reports Loom

The market had a strong run yesterday but overnight, some investors decided to take their profits, causing the S&P 500 to drop 20 points before the market even opened. This short-lived dip found support at key levels, but the market’s direction for the day was still uncertain.

When the market opened, it was clear that the Nasdaq was performing better than the Dow Jones. However, unlike previous sessions, the Dow’s struggles lasted only a short time. Thanks to the S&P U.S manufacturing Purchasing Managers Index (PMI), the gap between the two indices was closed within 15 minutes.

PMI Reveals Improvement, Even More Than Expected

At 9:45 a.m. Eastern, the PMI numbers were released and they brought some positive news to the market. The experts had predicted a reading of 46.0, but the actual number was even better at 46.8. A PMI report is like a thermometer for the manufacturing sector of the economy, with a reading of 50 indicating a neutral state, anything above 50 showing growth, and anything below 50 indicating contraction. While we’re still in a contraction phase, the fact that we’re getting closer to the expansion side is a good sign for the market.

The market continued to climb higher after the release of new data, but the pace was not as swift as the previous day. The S&P 500 futures reached a crucial point of resistance at 4,050, where the upward momentum began to slow down. As the market hovered around this level, traders became cautious and the market flattened out, as they waited for the release of Microsoft Corp’s (MSFT) earnings report.

Buyers Hold Indices Above VWAP

An important aspect to observe in today’s market activity is the respect paid to Weighted Average Price (VWAP). Despite the choppy and sideways movement, the market managed to stay above VWAP, suggesting a significant buying pressure present. The market was able to hold its ground ahead of the Technology sector earnings. Large institutional investors may be positioning themselves for the upcoming earnings reports. Suppose the market can maintain its position above VWAP and does not react negatively to Microsoft’s earnings report. In that case, it could be an indication that the market will continue to show strength tomorrow.

Microsoft Reports Earnings At the Close

Microsoft Corp. (MSFT) recorded a decline of -0.22% revealing its slowest sales growth in over six years in the last quarter. The demand for its software and cloud services decreased due to concerns about the global economy. Based in Redmond, Washington, the company reported a 2% increase in revenue, reaching $52.7 billion for the quarter ending December 31st. However, its net income fell by 12% to $16.4 billion.

Earnings Reporting Tomorrow 

Two names to report their earnings before tomorrow’s opening bell include Boeing Co. (BA) and Advanced Semiconductor Material Lithography (ASML). Boeing will have a role in the Dow Jones, whereas ASML will affect the Nasdaq.

Additionally, Tesla Motors (TSLA) is highly anticipated and will report after the bell tomorrow.

PMI Helps Recover Overnight Loses

The Nasdaq and the S&P 500 were negative to close the session. The S&P 500 futures closed down 0.06%, losing 3 points, while the Nasdaq futures closed down 0.18%, adding 21 points. The Dow Jones futures did not follow along, closing up 0.29%, an increase of 108 points.