MARKET ANALYSIS: WHAT TO EXPECT FROM THE LATEST REPORTING SEASON

• WSJ: Analysts expect S&P 500 companies to report lower profits. The key question is how long companies can protect profits by passing on higher costs to customers.
• Bloomberg: S&P 500 companies are expected to record a 9% drop in earnings in the Q2, making it their worst season since 2020.

Articles were published in two leading financial publications, where the reporting season that has already begun is called a test for the stock market.

FactSet forecasts Q2 earnings for companies to fall 7.2% from the same period a year earlier. The reasons are the tightening of the Fed's monetary policy. If corporate earnings fall, the price of the S&P 500 could decline as market participants believe stocks are overvalued.

The price of the E-mini S&P 500 futures, by the way, on Friday updated the maximum of the year — perhaps the articles about the test for the stock market on the eve of the reporting season already look traditional and do not cause due concern.

What can be alarming from the point of view of technical analysis is the proximity of the price of the E-mini S&P 500 futures to the upper border of the channel built on the reference points indicated by the arrows. It is possible that during the reporting season we will be able to witness a test of this line. And if, indeed, the company data turns out to be disappointing and overshadow the current optimism, we will get more arguments to expect resistance from this line.

Bank of America, Morgan Stanley, Tesla, Netflix, IBM, Goldman Sachs, J&J, and other top companies will report this week.

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