Investors rely on strong earnings to stabilize recent tech stock losses

From Investing.com: 2024-07-19 21:25:34

As earnings season picks up, investors hope strong corporate results will help tech stocks recover from recent losses. The S&P 500’s tech sector has dropped 6% in a week, while the broader index is down 1.6%. Tesla, Alphabet, Microsoft, and Apple are among companies reporting this week and next, with high expectations for earnings growth.

Tech giants have been driving the market higher, but concerns over valuations and potential earnings disappointments loom. Big tech’s performance is crucial, with Alphabet, Tesla, Amazon, Microsoft, Meta, Apple, and Nvidia driving 60% of the S&P 500’s gain this year. Earnings are expected to rise sharply for tech and communication services companies.

Following a failed assassination attempt on Trump and reports of potential semiconductor export restrictions to China, investors are shifting away from tech. There are hopes that positive earnings reports could ease selling pressure on the sector, with Ameriprise Financial advising investors to use pullbacks as buying opportunities.

Despite recent tech losses, a broadening market rally has boosted investor confidence. Historically, when gainers outnumber decliners by a significant margin, the S&P 500 has rallied an average of 4.5% in the following three months. Ned Davis Research suggests that strong market breadth improvements bode well for future stock performance.



Read more at Investing.com: Investors count on earning to calm $900 billion US tech rout By Reuters