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Market Mood

The US corporate earnings season is in full swing, coinciding with a notable market downturn. Profits will likely be the key factor in determining whether concerns over higher interest rates and geopolitical tensions lead to a deeper market decline. With the S&P 500 trading at a high valuation of 20 times analysts' 12-month forward earnings, compared to the historical average of 15 times, expectations for profit growth are already factored into the market.

The recent 16% surge in the S&P 500 is largely credited to the "Magnificent Seven" tech companies, with Tesla Inc. leading the upcoming profit announcements seen as significant market events. While these tech giants have driven recent profit growth, analysts expect other sectors to contribute more this quarter. Given the Magnificent Seven's significant contribution to the S&P 500's 2023 returns, their performance is closely watched, with any major earnings miss potentially impacting the market.

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