Weekly Summary: Apple and Amazon Failed Investors

Apple Inc. and Amazon have shredded many investors’ hopes to pieces as they missed the Q3 financial results expectations. Apple Inc beat the earning per share (EPS) forecast by just $0.01 at $1.24, but completely missed their revenue forecast that was released as $83.86 billion compared to the expected $84.85 billion.

The financial performance of Amazon Inc. turned out to be even worse as its EPS was at $6.12 vs forecasted $8.91. The revenue was reported to be $110.81 and missed analysts’ expectations of $111.62. As a result, the shares of Apple Inc.  opened with a 3.5% drop and Amazon’s shares lost 4.0%.

U.S. stock indexes futures are struggling. The futures for the S&P 500 broad market index are down by 0.4%, the Nasdaq 100 index lost 0.7% after the rise on Thursday by 1.0% and 1.4% respectively. So, it looks more like a correction of yesterday’s rally..

Apple Inc. and Amazon were trying to smoothen the bitter pill claiming that the supply chain disruptions were responsible for the decline. But what if other reasons were the case? What if we reached the point of a complete market saturation as worldwide inflation is dumping consumer spending?

Such disappointing financial results of acting high-tech pillars of the U.S. economy may sound truly alarming. And there is even a bigger buzz around the notion that the Federal Reserve (Fed) could decide to taper its massive monthly $120 billion bond-buying program above the expected $15 billion per month. That would mean the Fed is startled by high inflation, and if so, investors should be even more afraid.

The S&P 500 index missed its target at 4620 points, halting at 4598 points. The closes support level is at 4540 points, which is likely to be the next target considering Apple Inc. and Amazon’s misfortune.

The technical picture in the crude market has changed drastically after Brent crude benchmark prices unexpectedly dropped to $82.30 per barrel, making a downward scenario a basic one. So far, a possible decline in crude prices is limited to $81.80-82.00 per barrel. But if Brent crude prices remain sitting close to this level, they may plummet below $80.00 per barrel.

Gold missed a nice opportunity as the U.S. 10-year benchmark Treasuries yields dropped, dragging the Greenback down. That seem strange as the way to the target for gold prices at $1840 per ounce is open from a technical perspective.

The U.S. Dollar is facing down after it fell on Thursday. The Greenback fell under pressure after U.S. GDP slowed down in the Q3 to 2% vs 6.9% in the quarter before. The President of the European Central Bank (ECB) Christine Lagarde has failed to convince investors to not be concerned about the weaker Euro as she acknowledged the inflation is high and more sustainable but still, she believes it is of a transitory nature. That was enough for the markets to now expect that the ECB will  begin interest rate hike sooner than expected. The EURUSD lift off from the support at 1.16000 to the 1.16900, together with expectations that the Fed would announce tapering next week, may make us believe that such a surge may be considered excessive, and the pair may return to 1.16400 or even to 1.16000 before November 3 when the Fed meeting results will be announced.

The British Pound is seen to be more attractive as it may go down to the support levels at 1.37200-1.37300, creating interesting buy opportunities. The next possible target for the Pound may be at 1.38000 and further up at 1.39000. The Bank of England (BoE) interest rates hike expectations may support this idea as BoE’s decision on interest rates is also scheduled for next week.