Nasdaq 100 poised to erase the weekly gain after downbeat guidance from Microsoft

Research
Matt Weller
By :  ,  Head of Market Research

Nasdaq 100 poised to erase the weekly gain after downbeat guidance from Microsoft

After yesterday’s close, software giant Microsoft (MSFT) reported its quarterly earnings, and the results were mixed to say the least.

On a headline basis, the firm reported $2.32 in adjusted EPS, slightly above the $2.29 in earnings that analysts were expecting. However, revenue came in at just $52.75B, a tick below $52.94B eyed. Overall, net income fell by more than $2B from the same quarter last year, and the lackluster 2% increase in revenue represented the slowest growth rate since 2016.

Traders hoping that last quarter’s slow growth was just a blip received some dour news from the firm’s guidance, which came in below estimates at $50.5B-51.5B, implying a mere 3% growth rate over the same quarter last year. Notably, the firm’s CFO Amy Hood, suggested that Microsoft’s business slowed in December and that she expected the business trends the company “saw at the end of December to continue into [the next quarter].”

After a brief pop on the initial results, the stock is now trading nearly -3% lower ahead of the market open, which may sound modest, but represents a major loss of value for a stock with a nearly $2T market capitalization, the 2nd-largest publicly-traded company in the US. Traders will now turn their attention to other major earnings reports, including Tesla (TSLA) after the market close today and the rest of the FAAMG stocks next week.

Technical view: Nasdaq 100  (US Tech 100)

As the chart below shows, the tech-heavy Nasdaq 100 index is falling by more than 2% ahead of the US open to erase its week-to-date gains. With the index trading between its 50- and 200-day EMAs, as well as the middle of 4-month range, there is no clear medium-term technical bias. Readers may want to wait for a rally toward the top or a drop to the bottom of that range before trading with conviction, especially with a half-dozen massive earnings reports scheduled over the next week and a half.

CINDQ012252023

Source: StoneX, TradingView

One way or another, we’ll know a lot more about the outlook for the Nasdaq 100 at the end of next week!

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