Today’s Market: Refocusing on Revenue
Wall Street is refocusing on key fundamentals as traders’ concerns about the Middle East fade. Now that those concerns have been dispelled, traders and investors are focusing on the fact that tech companies’ earnings have fallen significantly compared to U.S. stock indexes, especially after the biggest weekly drop of more than 5.5% in more than five months. How will it affect the NASDAQ index? Stocks that drove the stock market to all-time highs, such as Nvidia and Tesla, fell more than 14% as investors saw tensions in the Middle East as an opportunity to book profits.
background
U.S. stock indexes have undoubtedly not only had a great start to the year, but also posted an impressive performance this past quarter. But things started to go awry when Israel attacked the Iranian embassy, making investors wary that things could go too far. To some extent, investors did so when Iran launched retaliatory direct attacks on Israel. However, calm prevailed and tensions did not escalate after the Israeli military attack on the Iranian city of Isfahan. From there, investors and traders once again shifted their focus away from escalating geopolitics and all eyes were on US earnings. And perhaps none more so than the U.S. earnings, which is currently causing traders to worry about performance. of the Magnificent Seven.
technology revenue
Starting today, traders will once again focus on the AI gold rush as Tesla releases earnings and the Nasdaq index is set to follow suit. Traders have already imposed severe punishment on the stock, which is at its lowest level in months. Not only has the company announced layoffs, indicating a slowdown in the demand equation, but it has also lowered prices on some products, confirming increased competition. To remain competitive, companies must take action.
The important thing to note here is that traders and investors need to be a little calm, and if demand is not strong enough to support additional labor, layoffs will reduce overhead costs for the company. Therefore, it is important to understand that this is a good thing from a management perspective. . And cost reduction is the way to combat increased competition. Because new entrants have increased competition, the monopoly that Tesla once held no longer exists.
Nevertheless, Tesla 
TSLA Due to Tesla’s much longer start, data on self-driving is still in a very unique position, and no other automaker has as much data. So the questions and focus will be on these innovative areas in today’s financial results. Investors are likely to be more cautious as the company’s stock price has fallen more than 43% year-to-date and its year-over-year sales declined for the first time since 2020. If earnings don’t respond today, prices could fall further and the Nasdaq index could fall further.
How low?
The Nasdaq index, already hovering near this year’s lows after posting its worst weekly loss since November last week, is likely to face very volatile trading this week. The levels shown in the chart below can influence trader sentiment. Despite the price decline, the chart below shows that the price is still trending upwards, and large buyers may be stepping in near support level 1, if not support level 2. As long as the index trades above the uptrend line, upward momentum is likely to pick up again.
Exness Nasdaq Chart
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