The S&P 500 has printed 6 new record highs since January 19th, 2024, and is now above the 4,900 mark for the first time ever.

Note that the psychologically-important 5,000 mark is now just 1.5% away from the closing price yesterday (Monday, January 29th).

This week’s buffet of (potentially) blockbuster events could seal the deal the S&P 500 to reach the 5k milestone, or push it drastically lower.

As already noted in our Week Ahead article (published on Mondays), here are some major events that could rock US stock markets this week:

• Tuesday, Jan 30th: Quarterly earnings from Microsoft and Alphabet
• Wednesday, Jan 31st: FOMC rate decision
• Thursday, Feb 1st: Quarterly earnings from Apple, Amazon, and Meta
• Friday, Feb 2nd: US nonfarm payrolls (NFP) report.

This article will focus on the upcoming earnings of some of the biggest US-listed stocks.

And markets are already forecasting how much each of these stocks could move on the day after their respective earnings announcements:

(note the % 1-day moves can be either up or down)

Earnings releases due Tuesday, Jan 30th:

• Microsoft: 4.3% move up/down on Jan 31st 
• Alphabet: 5.2% move up/down on Jan 31st

Earnings releases due Thursday, Feb 1st:

• Apple: 3.3% move up/down on Feb 2nd
• Amazon: 6.2% move up/down on Feb 2nd
• Meta: 6.5% move up/down on Feb 2nd

Note that these stocks, altogether have a combined market cap (how much investors value these companies) of about US$9.5 trillion!

Collectively, these 5 Big Tech stocks account for about 22% of the entire S&P 500’s total market cap of US4 43 trillion.

In other words, how markets respond to these Big Tech earnings should have a major influence over how the S&P 500 performs this week.

NOTE: The new US500 index tracks the performance of the benchmark S&P 500 index.
 

Potential Scenarios:

• Potential upside target: 5,000

The US500 could be sent well on its way towards the 5,000 mark if these five tech companies can deliver a positive surprise via better-than-expected earnings for Q4 2023, or a more optimistic outlook for its 2024 earnings.

Of course, that would also depend on the Fed suggesting that its first rate cut could come as soon as March 2024, coupled with signs of a weakening US jobs market in Friday’s NFP data.

However, a sharp spike upwards may trigger a technical pullback, given that the US500's 14-day relative strength index is already above the 70 line which marks "overbought" conditions.

• Potential downside target: 4,800 (21-day SMA)

The US500 may falter back towards its 21-day simple moving average (SMA) around the 4,800 mark if Big Tech’s Q4 2023 earnings disappoint, or they sound less optimistic about their earnings growth this year.

Furthermore, the US500/S&P 500 may be dragged lower if the Federal Reserve rules out a rate cut in March 2024, along with a US jobs market (via Friday’s NFP numbers) continues to demonstrate its resilience.

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