Another Bounce Fails as Amazon and Google Disappoint

The volatile and bearish period continues on Wall Street today, as, despite the strong intraday rally, which was fueled by a slew of better-than-expected earnings, the after-hours session saw a sharp reversal, and the major indices are back near their multi-month lows.

Nasdaq 100 Futures, 4-Hour Chart Analysis

The Nasdaq saw the bulk of the action both in regular and after-hours trading, and while Microsoft (MSFT) spearheaded the rally thanks to its great quarterly report, Amazon (AMZN) and Google parent Alphabet (GOOG) dragged the benchmark lower after the bell.

Although both giants beat on earnings, revenues missed the consensus estimates, and the companies guided lower for the next quarter and that triggered a wave of selling across the board. in the past weeks all rally attempts failed, and despite today’s relative stability in Asia and Europe, US stocks couldn’t gather lasting momentum.

EUR/USD, 4-Hour Chart Analysis

The European Central Bank (ECB) held its monetary meeting before the US open, and although President Mario Draghi touched the hot topics of the slowing global economy and the Italian budget, he stressed that the central bank is not planning to extend its asset purchase program, and he repeated the likely pick-up in inflation.

Unicredit (UCG), Daily Chart Analysis

While bulls were hoping for a much more dovish ECB, the Euro failed to bounce durably, even after its recent significant decline, and that points to further troubles ahead for the common currency. Given the situation in the European financial system, the fact that Draghi didn’t address the Italian situation could unleash another wave of risk-off flows.

Yields Turn Choppy amid Mixed Economic Numbers

Treasuries had another big day, as, besides the ECB meeting, both the US Durable Goods report and Pending Home Sales came out. Core durable goods orders missed the consensus estimate, despite the beat in the headline number, but pending home sales beat the consensus estimate, providing a brief relief to homebuilders.

2-year US Treasury Yield, 4-Hour Chart Analysis

Yields first headed back higher thanks to the more-hawkish-than-expected ECB and the rebound in stocks, but in after-hours trading Treasuries rebounded as stocks plunged, and now, the yield curve is close to its recent lows.  Tomorrow we will have the advance GDP report coming out, and both the headline number and the price index has the potential to move Treasuries and stocks alike.

The Asian and European sessions might be very choppy as although the broader trends are clearly negative, most of the key markets are oversold, and no major economic releases will be coming out before the US growth data.

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Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.