Investors turned more optimistic on US equities in the week before Wednesday’s Federal Reserve rate decision as a better-than-feared earnings season supported sentiment, according to Citigroup Inc. strategists.
(Bloomberg) — Investors turned more optimistic on US equities in the week before Wednesday’s Federal Reserve rate decision as a better-than-feared earnings season supported sentiment, according to Citigroup Inc. strategists.
Traders added $9 billion in new long positions on S&P 500 futures over the past week, a team led by Chris Montagu wrote in a note. Meanwhile, Nasdaq 100 futures saw the largest weekly change in positioning across the indexes Citi tracks and are now dominated by bullish bets, the strategists said.
“With the earnings season going into full swing, investors appear encouraged by the recent slew of positive surprises and bullish flows returned to US futures,” Montagu wrote. “A stronger-than-expected earnings season for US large caps seemed to overshadow the recent weak macro data releases in the minds of investors.”
Nearly 70% of companies in the S&P 500 Index have posted quarterly earnings and more than 79% of the reports have beaten estimates, according to data compiled by Bloomberg Intelligence. That’s helping offset disappointment from weak economic data, including US gross domestic product figures that missed estimates.
Technology firms in particular have had a strong earnings season, with results from Meta Platforms Inc., Google parent Alphabet Inc. and Amazon.com Inc. all exceeding expectations. Apple Inc. is due to report on Thursday.
As the end of the earnings season approaches, investors are turning their attention back to the monetary policy outlook. The Fed is expected to deliver a 25 basis-point rate increase on Wednesday, with some traders betting it will signal a pause in its aggressive hiking campaign.
Positioning has been more mixed in Europe, according to Montagu. “The bullish trend seen in earlier weeks appears to be fading with positioning momentum weakening over the past two weeks,” he wrote.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.