Stock Exchanges | The earnings season has beaten investors’ dismal expectations, Wall Street is on the rise

Stock market week has started with an exceptionally strong rise in the US stock market.

In the early hours of the stock exchange day on Monday, the S&P 500, the world’s most followed stock indices, rose 2.6 percent and the Dow Jones index rose 1.8 percent. The technology-focused Nasdaq was up a whopping 3.4 percent.

The market has fluctuated a lot in recent weeks, and you can’t draw conclusions about the broader direction of the stock market based on one day. The current earnings season can lead to big price movements. At the same time, the uncertainty of the economy’s big picture and future interest rate hikes are gnawing at investors.

At least so far, the earnings season hasn’t given much reason to put on sales pants.

“The pessimism has been palpable, and expectations for earnings announcements are very low,” says LPL Financial’s Chief Strategist Quincy Krosby for the Wall Street Journal (WSJ).

“We have seen positive surprises. When the market is oversold, you don’t need a very big catalyst for it to rise.”

Earnings period is believed to be able to influence the market significantly, because the companies publish their instructions for the future in addition to the figures of the past.

So far, the big banks that have announced their results in the United States say they are worried about the impending recession. At the same time, their third quarter results have continued to be strong.

Bank of America, which announced its results on Monday, beat analysts’ expectations with its earnings per share. The bank’s stock rose by more than five percent.

Other stocks that are rising strongly have included Tesla, Apple, Amazon, Nvidia, Netflix and Google’s parent company Alphabet.

To the same at the time, the outlook for the future is rather gloomy.

“We’re heading for a global recession, so there’s very little room for a strong rally,” says Pine Bridge’s portfolio manager Hani Redha for the WSJ.

“The trend is still downward.”

So the swaying can be very momentary.

For example, last Thursday, the most followed stock indices saw the wildest complete reversal in decades. After the inflation figures were announced, the stock indices turned from a noticeable decline to a big rise in the middle of the day.

Giant bank Morgan Stanley Strategist Michael J. Wilson once again, the S&P 500 index has a short bullish spurt in its comment published on Monday.

According to Wilson, the S&P 500 stock index has already fallen so much that it could initiate a technical upswing, which would increase the index by 16 percent from Friday’s closing price.

“Although it seems like a really big move, it would be in line with the bear market this year and previous years,” Wilson told the news agency Bloomberg’s by.

Also, the background of Thursday’s hard jump was seen to be, among other things, the achievement of technical frontiers. At that time, the S&P 500 index hit both the midpoint of the bull market that started at the beginning of the corona pandemic and the index’s 200-day moving average

Wilson believes that the possible initial upswing will not be long-lasting. He also warns that the spurt is not certain, but the index can also drop at least five percent from Friday’s closing price.