Equities began the day steady, with tech stocks leading the way after the Nasdaq hit another record high on Wall Street. Although some early gains faded, the Nasdaq ended at a new peak. So far in July, the index is up nearly 3%, while the S&P 500 has risen about 1.6%. US futures remain mostly flat, as there are no new trade updates. Attention is on this week’s important earnings reports. Verizon surpassed expectations and raised its profit outlook for the year after a strong second quarter.

Upcoming Earnings Reports

Google/Alphabet and Tesla will report after the market closes tomorrow, which could sway market sentiment. Their results are crucial, especially without new trade news. Nvidia’s stock continues to perform well, but support from other big companies is still vital. This week acts as a preliminary test before more major tech reports come in later this month. The market’s stability is evident in the CBOE Volatility Index (VIX), which is currently around a low of 13, indicating complacency. This low volatility often predicts sharp moves, particularly with significant earnings approaching. Traders should consider this time as a chance to prepare for anticipated price swings.

Market Implications of Earnings

For the upcoming reports from these major companies, options traders expect a notable reaction. The market anticipates a potential one-day change of about 5% for Alphabet and over 7% for Tesla after their announcements. Since Tesla has historically experienced post-earnings changes exceeding 10%, strategies like long straddles or strangles could be suitable for those betting on large price movements, regardless of the direction. The article highlights that the market needs support from more than just one company. A recent Bank of America report shows that just five stocks have driven over 60% of the S&P 500’s total return this year, so any disappointment could broadly affect the market. Traders might consider purchasing protective puts on tech-heavy indices like the QQQ to guard against negative surprises from these upcoming earnings. Create your live VT Markets account and start trading now.

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