Dow Jones, the S&P 500, and Nasdaq price forecast at the start of the Q4 earnings season

The Dow Jones, the S&P 500, and the Nasdaq weakened on a weekly basis as investors traded cautiously at the start of the Q4 earnings reporting season.

Next week, Procter & Gamble, Alcoa, United Airlines Holdings, Bank of America, Goldman Sachs Group, Union Pacific, and Netflix ​are among the companies scheduled to report quarterly results.

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Investors will watch guidance carefully from these companies to determine if inflation will crimp profit margins or if costs can be passed through.

They will also pay close attention to the companies’ outlooks and how U.S. companies coped with staffing and supply-chain issues last quarter.

U.S. policymakers finally concluded that price pressures were not just transitory, and the U.S. Federal Reserve increased the reduction in bond-buying on a monthly basis from $15 billion to $30 billion.

Pulling off support programs is the first step towards tightening, and according to Fed Chair Jerome Powell, the U.S. central bank will consider three rate hikes in 2022. Kim Forrest, chief investment officer at Bokeh Capital Partners, said:

Higher interest rates could pressure the stretched valuations of tech stocks, so companies need to deliver impressive numbers in the coming weeks. The tech sector is trading at about 27 times earnings estimates for the next 12 months, near its highest in 18 years, compared to 21 times for the overall S&P 500.

The rising inflation represents a threat to the economy, while the prospect of renewed lockdowns and rising COVID-19 cases also made investors nervous.

The U.S. continues to fight with high numbers of new daily infections, leading to staffing issues across industries; investors have seen that the virus still has the ability to disrupt business.

S&P 500 down -0.30% on a weekly basis

S&P 500 (SPX ) slipped 0.30% last week, marking its second weekly drop in a row, and closed at 4,662 points.

The strong support level stands at 4,500 points, and if the price falls below this level, it would be a strong “sell” signal.

DJIA down -0.88% on a weekly basis

The Dow Jones Industrial Average (DJIA) weakened -0.88 % for the week and closed below 36,000 points.

The decline for 2022 thus far has come amid concerns about inflation and the COVID-19 pandemic, and the upside potential remains limited for the week ahead.

Nasdaq Composite down -0.25% on a weekly basis

Nasdaq Composite (COMP) has lost -0.25% on a weekly basis and closed at 14,893 points.

If the price jumps above 15,500 points, the next target could be around 15,700, but if the price falls below the 14,500 support level, it would be a firm “sell” signal.

Summary

Wall Street’s three main indexes weakened on a weekly basis as investors traded cautiously at the start of the Q4 earnings reporting season. Investors will watch guidance carefully from companies to determine if inflation, staffing, and supply-chain issues will crimp profit margins or if costs can be passed through.

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