NAS100 Subdued Ahead of Big Tech Earnings Blitz & the Fed

NAS100 Analysis

After a banner 2023 fueled by the Artificial Intelligence revolution and the surge of the firms at its forefront, the tech-heavy index has made a strong start to new year that resulted to new all-time highs. The tech sector will be front and center this week as five of the Magnificent Seven report, among others, following the disappointing results of Tesla earlier in the month.

Alphabet and Microsoft kick things off tonight, in another AI face-off, with the latter firmly in the lead after the last round. Chip maker AMD that tries to catchup with the AI enabler Nvidia and expects increased AI sales ahead, is due on the same day.

Meta picks up the baton on Thursday, which has turned its attention to AI and comes from record top and bottom lines in Q3, but had warned of uncertainties. On the same day, we expect Amazon that also had an impressive quarter and has been stepping up its AI game, while Apple has been facing challenges, but managed to capture the top spot in smartphone shipments in 2023 according to Canalys, in an encouraging sign. ^[1]

Adding to the above earnings blitz, markets will also be monitoring Wednesday policy decision by the Fed. Policymakers have hinted that the terminal rate has likely been reject and their December rates imply at least three rate cuts this year ^[2]. However some officials pushed back recently against the more aggressive market pricing.

The outcome of these events will shape the trajectory of the pair. With the bar high for tech after last year's blowout performance and optimism for a Fed pivot, there is room for disappointment. NAS100 seems poised to hit the 18K mark for the first time in history, but a pullback may be needed. There is scope for a return to the EMA200 (16,830), but sustained weakness below it will need a significant deterioration in sentiment.