Major earnings week sets up stocks for potentially breakout

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It’s a big week for stocks, with five of the Mag 7 companies slated to report earnings this week: Alphabet (Tuesday), Microsoft (Wednesday), Meta (Wednesday), Apple (Thursday) and Amazon (Thursday). 

The Qs will be a good proxy to watch this week, as about 32% of QQQ’s holdings are in the above five stocks. The fund has lagged the Nasdaq Composite over the past 30 trading days (1.8% returns for QQQ vs. the Nasdaq’s 2.4%), but strong earnings reports from these tech giants could be enough to bring the index out of this resistance zone. 

Corporate earnings generally have a packed schedule this week, with 169 companies in the SP 500 due to publish quarterly results. Ford, Visa, Uber, Exxon and Mastercard are among the big names also sharing reports in the coming days. 

Of the roughly one third of SP 500 companies that have already reported, 75% published earnings per share that were above analysts’ estimates, FactSet data shows. Meanwhile 59% have reported better-than-anticipated revenue for the third quarter. 

“Q3 earnings season is thus far marginally better than the recent past in terms of revenue and earnings beat amounts, but it still lags long-run averages by a considerable margin,” DataTrek Research co-founder Nicholas Colas said. “Even still, earnings are good enough to support current SP levels since they support expectations for further improvement in Q4 and into 2025.”

We’ll have to wait and see if this rally can last.

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