US OPEN: Wall Street opens lower in spite of solid GDP data

• Wall Street indices launched today's trading lower
• US100 drops below key support zone
• Earnings from Merck, UPS and Mastercard

Wall Street indices launched today's cash trading slightly lower. This comes in spite of a solid US GDP data for Q3 2023 released earlier today, that showed annualized growth accelerating from 2.1% in Q2 to 4.9% in Q3 2023 (exp. 4.5%). Disappointing earnings from tech companies seem to be a dominating theme with Nasdaq being top laggard during Wall Street cash session opening (-0.4%).

Source: xStation5

Disappointing earnings reports from major US tech companies as well as an overall deterioration in market sentiment pushed Nasdaq-100 futures (US100) below a key resistance. Index dropped below the key support zone ranging between the lower limit of the Overbalance structure at 14,650 pts and 23.6% retracement of the upward move launched a year ago. A break below the Overbalance structure hints at a bearish trend reversal. A point to note is that this zone also served as the lower limit of the descending triangle pattern and the textbook range of the downside breakout from this pattern suggests a possibility of a drop to as low as 13,350 pts area, where the 38.2% retracement can be found.

Company News

United Parcel Services (UPS.US) reported Q3 adjusted EPS at $1.57, marking a big drop from $2.99 reported a year ago. However, it was higher than $1.52 expected by analysts. Revenue at $21.06 was 13% YoY lower and also below $21.51 billion expected. Package revenue was down 11% YoY while Supply Chain Solutions revenue was down 21% YoY. Company issued a disappointing full-year forecast expecting revenue to reach $91.3-92.3 billion, down from 'around $93 billion' in previous forecast.

Merck (MRK.US) reported a 6.7% YoY increase in Q3 revenue, to $15.96 billion (exp. $15.35 billion). This was driven by a 17% YoY jump in Keytruda sales, to $6.34 billion. Adjusted EPS reached $2.13, marking a 15.1% YoY jump. R&D spending was 5.7% YoY lower at $3.3 billion (exp. $3.23 billion). Company expects full-year sales to reach $59.7-60.2 billion, up from previous guidance of $58.6-59.6 billion.

Merck (MRK.US) is trading little changed following a solid Q3 earnings report. Stock continues to trade between the support zone at $101.50 and the resistance zone at $105.50. Shares made a few attempts at breaking above the $105.50 zone recently but all of the failed. A downside breakout below the $101.50 area we have seen recently turned out to be a false breakout and the stock has quickly returned to the short-term $101.50-105.50 range. Source: xStation5

Mastercard (MA.US) reported Q3 2023 earnings today before the Wall Street session opened. Company reported net revenue at $6.53 billion, in-line with market expectations. Adjusted EPS at $3.39 was higher than $3.23 expected. Operating margin came in at 58.8%, above 58.5% expected. Company said that the volume of cross-border payments increased 21% YoY (exp. 21.2% YoY). Gross dollar value of payments processed reached $2.31 trillion. Mastercard CEO warned that political and economic uncertainty remains elevated.

Ford Motor (F.US) is trading slightly higher today after the United Auto Workers union reached a tentative labor agreement with the carmaker.

Mastercard (MA.US) launched today's trading with a bearish price gap, dropping below the support zone marked with 23.6% retracement of the upward move launched in October 2022. Should the stock continue to decline, the next support zone in-line can be found at 38.2% retracement in the $360-365 area. Source: xStation5