A new trading week promises more clarity about the prospects of the corporate sector for 2023. Some top US companies have already presented their quarterly reports.

As expected, the benchmark stock indices had a successful day on Friday. Netflix’ corporate earnings and Alphabet’s plans for lay-offs were the benefactor of gains in the stock market. The Dow Jones jumped by 330 points or 1%. The Nasdaq closed with the strongest gain of 2.66%. The S&P 500 climbed by 1.89% to close at 3,972.
The benchmark indices opened on Monday cautiously. Futures on the stock indices traded sluggishly and mixed in the pre-market. The S&P 500 is expected to trade in the intraday corridor between 3,910 and 4,020.
The S&P 500 and the Dow Jones halted a three-day losing streak on Friday. In contrast, the Nasdaq grew by more than 2% in light of the news on the corporate sector. Netflix shares surged by 8.46% because the streaming company increased the number of subscribers more than expected. Besides, Alphabet reported that it would fire 12,000 employees. As a result, its shares jumped by 5.34%.

The news enabled the telecom sector to grow by 3.96%, the best result among companies in the S&P 500. As for weekly results, the Dow Jones lost 2.7%. The Nasdaq added 0.55%. The S&P 500 shed 0.66%. Investors still voice concern about corporate earnings because the US economy is showing the signs of a slowdown and a looming recession.

In the weeks ahead, financial reports from high-tech companies will serve as a litmus test for a rally. The Nasdaq gained almost 6.2% in 2023, stronger than the 3.45% growth of the S&P 500.

Such superiority is ensured by two factors. Investors are allocating their funds to the shares oversold in 2022. Now investors want to check whether these companies will survive the wide-expected economic downturn.

Recent economic data mirrored some signs of easing inflation, but also revealed tight employment conditions. This is the key for the Federal Reserve to decide on further monetary tightening.

Recessions worries amid high interest rates affected bullish stocks. This forced large high-tech companies such as Microsoft, Amazon, and Alphabet to fire thousands of employees. The same concerns account for the cautious market sentiment today.

The New York session today is going to be quiet amid the empty economic calendar. No Fed policymakers will speak today. Some corporate news could set the tone for trading.

The shares of software developer Salesforce rose by 4.0% in the pre-market after Elliott Management Corp had injected multi-billion investments into the company.

PayPal Holdings shares dropped by 2.1% after the German watchdog launched proceedings against PayPal Europe over the possibility that it hindered competition.

Such news could set the tone today but investors are anticipating corporate reports from the companies that account for more than half of the S&P 500’s value. Their reports will be available in the two coming weeks, including Microsoft, Tesla, IBM, and Intel this week. Their records will trigger serious market moves.Being the focal point in the currency market, the euro is holding the upper hand over the US dollar. Its index opened a week below 102. Having shed 0.03% in the pre-market, the US dollar index is trading now at 101.9. The intraday corridor for the index is seen between 101.5 and 102.3. ECB President Christine Lagarde confirmed that the central bank would continue rate hikes at the same fast pace. Traders got the hint and pushed the euro to the highest level in 9 months against the US dollar.
On the contrary, FedFunds futures overvalued the chance that the Fed could increase the official funds rate by 50 basis points next month. Investors reckon that the US central bank will lower interest rates by 50 basis points in the second half of the year on the back of soft inflation data, consumer spending, and the housing market.

Meanwhile, the US dollar is on the defensive in light of the hawkish comments from the ECB president. As for the US Fed, its policymakers mainly agree that interest rates will increase at least to 5% this year.

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