SPY, QQQ Climb, But Retail Cautious Ahead Of Next Week's Tech Earnings, Key Inflation Data

Nvidia, Inc. ($NVDA) and Tesla, Inc. ($TSLA), along with most other mega-cap tech stocks ran up strongly on Friday, lifting the SPDR S&P 500 ETF Trust ($SPY), and the Invesco QQQ Trust ($QQQ), which tracks the tech-heavy Nasdaq 100 Index.

As of 2:00 p.m. ET, the SPY advanced 0.01% to $579.30 and the QQQ jumped 0.72% to $495.88.

Techs Lead

The Nasdaq Composite Index, one of the key stock market gauges, hit a fresh intraday record, and appears on track to close at a new high.  Hopes of the Federal Reserve following up on its September rate cut and strong corporate profit growth have primarily buoyed sentiment.

Tesla, which has a 1.49% weighting in the SPY and 3.23% weighting in the QQQ, rallied nearly 22% on Thursday and has added about 3% in Friday’s session. Nvidia, with a 6.12% weighting in the SPY and 7.6% weighting in the QQQ, has also been on a two-session winning streak.

Notwithstanding the rally, retail sentiment toward SPY, which is a proxy for the broader market, has turned ‘extremely bearish.’

On Stocktwits, the sentiment score was 23/100 for the SPY as of 1:07 pm ET, with message volume also dropping to ‘normal.’

Sentiment toward QQQ, though slightly better, was "bearish.'

Fears of an imminent market correction after the election is weighing down in the minds of some retail traders.

Key Week Ahead

The upcoming week poses a key test for the ongoing market momentum. A slew of high-profile mega-cap tech names, including Apple, Inc. ($AAPL), Meta Platforms, Inc. ($META), Microsoft ($MSFT), Alphabet, Inc. ($GOOGL) and Amazon, Inc. ($AMZN) are scheduled to report their quarterly results next week.

If earnings from these companies satiate Wall Street, the rally could have another leg up. On the contrary, disappointments could trigger a correction.

There will be two major economic data releases as well. On Thursday, the Bureau of Economic Analysis is scheduled to release the personal income and spending report for October, which comprises key inflation data - popularly called the Fed’s favorite gauge of pricing pressure.

The monthly non-farm payrolls report for October, scheduled for Friday, assumes importance due to the Fed’s recent accent on the employment market. A hotter-than-expected number could push bond yields higher on expectations that the central bank will go slow with its rate-cutting cycle.

These two data  come just ahead of the Federal Open Market Committee’s Nov. 6-7 rate-setting meeting and are widely expected to have a bearing on the verdict. The futures market has currently priced in a 97.6% probability of a 25 basis-point cut in the Fed funds rate to 4.50%-4.75%.

Read Next: Retail's Bearish Sentiment On Tesla Aggravates Even As Stock Extends Post-Earnings Rally

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