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Stocks opened positively to start the week, continuing a streak of gains observed over the previous four trading days. This presents a chance for investors and traders to capitalize on a significant rally that has the potential to elevate prices further.
The week ahead is anticipated to be impactful, loaded with earnings reports, economic indicators, and additional presidential remarks regarding tariffs and trade policies. Investors seem to be adopting a cautious stance on this Monday, marking a shift from prior frenzied optimism.
The Technology Select Sector SPDR Fund (XLK) saw an impressive increase of over 8% last week, recovering from being one of the poorest-performing sectors in the U.S. stock market for 2025 thus far. However, XLK faced a slight decline of 0.2% on Monday.
Market Observations
Chris Larkin, managing director of trading and investing at Morgan Stanley’s E*TRADE, reflected on the current market dynamics, stating, “This week might be centered on the theme of ‘follow-through.’” He noted that the S&P 500 recently experienced its third-largest weekly gain since November 2023, emphasizing that the sustainability of this rally hinges on the administration’s approach to tariffs and its stance on China.
Larkin anticipates that the week’s earnings and economic data releases could introduce volatility into the markets. Yet, he suggested that “large price fluctuations are more palatable when they trend upwards.”
The Cboe Volatility Index (VIX) slightly increased to 25.05 from 24.84 on Friday. Meanwhile, the U.S. Dollar Index (DXY) decreased to 98.92 from 99.47, and the yield on the 10-year U.S. Treasury note fell to 4.212% from 4.266%.
At the end of trading, the blue-chip Dow Jones Industrial Average gained 0.3%, closing at 40,227. The broad-based S&P 500 rose by 0.1% to reach 5,528, while the tech-focused Nasdaq Composite saw a slight decline of 0.1%, settling at 17,366.
Insights on Market Indicators
In light of the significant rally in technology stocks, multiple technical market indicators have triggered, showcasing potential shifts in market sentiment. Ryan Detrick from Carson Group posed the question, “Are the lows in?” He suggests that current patterns do not align with a bear market scenario.
Detrick pointed out that the Zweig Breadth Thrust Indicator activated last Thursday, an event that typically signals rapid changes in market appetite. He highlighted that this indicator shows robust gains when stocks transition quickly from being deeply oversold to highly overbought.
Such an indicator has been activated only 19 times since World War II, with each instance leading to higher prices within a year. This historical data, according to Detrick, showcases the strength of this signal. He underscored that the market has demonstrated positive patterns—where the S&P 500 has gained over 1.5% for three consecutive days—indicating a strong upward trend.
Moreover, more than 70% of companies listed on the New York Stock Exchange (NYSE) experienced gains during these three days, which is considered a rare yet promising sign for future performance.
Detrick noted, “However, we must remain wary. The current landscape is influenced by real-time news and social media, which can induce volatility. Nonetheless, recent market movements have been quite encouraging.”
Upcoming Earnings Reports
The upcoming earnings calendar indicates a significant week ahead, with 180 S&P 500 companies, including 11 from the Dow Jones, set to report their first-quarter results. FactSet analyst John Butters highlighted that of the 258 S&P 500 companies that provided earnings guidance for the year, 151 issued negative guidance while 107 were positive.
Butters observed that this represents a concerning statistic, with 59% of firms giving a negative earnings outlook. Despite this, the blended net profit margin for the S&P 500 sits at 12.4%, which, although slightly lower than the previous quarter, exceeds both the year-ago figure and the five-year average of 11.7%. Notably, this quarter marks the fourth consecutive period in which the S&P 500 has maintained a net profit margin above 12%, which hasn’t occurred since the latter half of 2021.
Economic Indicators Ahead
The economic calendar was relatively quiet at the start of the week; however, a flurry of important data releases is set for Tuesday through Friday, leading up to the next Federal Reserve meeting.
The Bureau of Labor Statistics is expected to publish its Job Openings and Labor Turnover Survey (JOLTS) for March at 10 am EDT on Tuesday. Following that, on Wednesday at 8:30 am EDT, the Bureau of Economic Analysis will disclose expectations for the Personal Consumption Expenditures Price Index (PCE) for March, which serves as the preferred inflation measure for the Fed—as well as first-quarter GDP growth figures.
On Thursday, there will be releases of weekly jobless claims alongside the Institute for Supply Management Purchasing Managers Index data. All these reports culminate in “Jobs Friday,” where the BLS will provide an update on the employment situation as of April.
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