U.S. stocks opened the trading day Thursday with a collective sigh of relief, snapping a two-day losing streak as investors braced themselves for the official kick-off of tech earnings season with Netflix (NFLX) on deck. The S&P 500 (^GSPC) gained 0.5%, the Dow Jones Industrial Average (^DJI) rose a more robust 0.7%, and the Nasdaq Composite (^IXIC) edged up 0.4%, clawing back some ground after recent tech sector weakness.
Market sentiment remains cautious with lingering concerns about inflation’s stubborn persistence and the Federal Reserve’s potential hesitance to cut interest rates later this year. This has shifted the spotlight to corporate earnings, with investors closely scrutinizing company reports to see if they can meet lofty expectations.
Taiwanese chip giant TSMC (TSM) served as an early appetizer for the tech earnings feast. While the company reported a quarterly profit beat, its cautious outlook on growth outside of memory chips sent the stock tumbling over 5%. However, TSMC did offer a glimmer of hope, highlighting an “insatiable” appetite for artificial intelligence (AI) technologies.
The main course arrives later today with Netflix’s financial update. As the first megacap tech company to report, Netflix’s performance is seen by many as the first real test of investor sentiment during this earnings season. The continued influence of megacap stocks on market direction means a strong showing from Netflix could provide a much-needed boost.
Adding a touch of optimism, U.S. bond yields dipped from recent five-month highs, offering some relief to stocks. The 10-year Treasury yield (^TNX) settled near 4.56%, alleviating some pressure on equities. Meanwhile, gold continued its stellar run, reaching new all-time highs above $2,350 per ounce. This surge is likely fueled by ongoing central bank gold purchases and safe-haven demand spurred by geopolitical tensions.
As the week progresses, the tech earnings season will continue to dominate market narratives. Investors will pore over financial reports from other tech giants, parsing their performances and growth forecasts for clues about the health of the sector and the broader economy. With Netflix leading the charge, this week will be crucial in setting the tone for the rest of the earnings season and potentially shaping near-term market direction.
