The S&P 500 indexhas crashed in the last three straight days as focus shifts to the upcoming NVIDIA earnings and Donald Trump’s tariff decisions. SPX slipped to a low of $5,955 on Tuesday, down by over 3% from its highest point this year. So, is the SPX index a good buy now or is it riskying a bigger drop in the coming days.
NVIDIA earnings ahead
The most important catalyst for the S&P 500 index on Wednesday will be the NVIDIA earnings, which will provide moe details about the artificial intelligence industry.
Analysts expect that NVIDIA will publish strong top line and bottom line numbers. The average estimate is that its revenue jumped by 72% in Q4 to $38.16 billion, bringing the annual figure to $129 billion. Based on NVIDIA’s history, chances are that the figure will be about $40 billion.
The company’s earnings will also be strong, with the average earnings per share for the final quarter being 85 cents, higher than the 52 cents it made a year earlier. NVDA has a long history f beating the analysts forecasts.
These results are important for the S&P 500 index for two main reasons. First, the index is market cap weighted, and NVDA is the second-biggest one after Apple. As such, a big crash or rebound would have an impact on it.
Second, NVIDIA is the most important company in the artificial intelligence (AI) industry today since it makes the most advanced semiconductors. Its chips are used by large companies like Microsoft, Google, and Amazon to train their most advanced AI models.
Therefore, a sign that the AI industry is slowing will lead to a big shock that will affect other firms in the space. For example, Palantir Technologies has become a $200 billion company because of its focus on the AI space.
More corporate earnings ahead
NVIDIA is the most important company in terms of the S&P 500 index performance this week. Still, there are several more important companies that will publish their results.
Salesfoce, the biggest company in th customer relations management (CRM) industry will be another one that will publish their numbers. Its results will provide more information about the artificial intelligence business and its overall growth.
The other top firms to watch this week will be TJX Companies, Lowe’s, Synopsys, CRH, Snowflake, eBay, Dell, Monster Beverages, HP, and Warner Bros. Discovery.
Broadly, this has been a good earnings season as the average earnings growth was 16.9%, the highest level since 2021.
Tariff news ahead
The other key S&P 500 news will be on tariffs, which Donald Trump has vowed to implement on friendly and foe countries. Tariffs on Mexico and Canadian goods will take place in May. The same is true with those on steel and aluminium.
These tariffs will have a big impact on companies in the S&P 500 index since many of them do a lot of business internationally. For example, automakers like General Motors and Ford will be affected by tariffs on imports and those on steel and alumium. All these factors explain why the fear and greed index has moved to 23.
S&P 500 index analysis
The daily chart shows that the SPX index formed a triple-top chart pattern at $6,127, and whose neckline was at $5,777. This is a highly popular pattern that often leads to more downside.
The index has also formed a rising wedge pattern, comprising of two rising and converging trendlines. There are signs that the MACD and the Relative Strength Index (RSI) have formed a bearish divergence pattern.
Therefore, the stock will likely have a bearish breakdown, with the next target being at $5,7777, the lowest swing on January 13.
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