In this Stockhead series, Josh Gilbert – market analyst at global investment platform eToro – gives investors the scoop on all things Nasdaq related; the key market themes, along with popular investment trends based on eToro’s data and insights.

It was a dramatic week for markets last week, with some extreme intra-day volatility as investors digested an even-more hawkish Fed and rising geopolitical tension.

But, despite all of that, US markets showed resilience to end the week flat.

Nasdaq bounces back

The Nasdaq 100 gained 3.2% on Friday — its biggest one-day percentage gain since March (gains which were followed by another 3% jump last night).

A couple of tech giants led the way last week, as Apple climbed 4.9% while Microsoft added 4.1%, putting them among the top 10 best performers on the Nasdaq 100.

Last week, a bright spot for technology was also closer to home.

After reporting second-quarter results that exceeded expectations and a third-quarter revenue forecast that was ahead of analyst projections, Atlassian soared 13 per cent, making it the best performing stock on the Nasdaq 100 last week.

It’s been a bumpy start to earnings season, but thus far it’s been generally positive, with 80% of US earnings coming in above expectations.

We continue to see that big names are more resilient to cost pressures and can counter this to maintain high margins.

The recent volatility is likely to be seen as an opportunity by investors, especially in high-quality companies. A great example is Alphabet.

It’s currently trading at 24 times forward earnings, lower than the average of the Nasdaq 100 and around has around USD$60 billion in free cash flow, a pretty appealing prospect.

However, investors are treading with caution to try and time their ‘dip buying’ with most not wanting to pull the trigger too soon.

Timing the market is nearly impossible, and investors are unlikely to find the ‘real’ bottom, but a long-term mindset can help offset this.

eToro Australian investors seem to be more resilient and less willing to sell, anticipating that markets will recover as they did in March 2020.

Earnings season

Earnings remain in focus this week, with Big Tech reporting.

Alphabet, Meta and Amazon all report their latest numbers, and investors will be again looking to these names to deliver robust results and provide stability.

Meta Platforms – formally Facebook – missed analyst expectations in Q3 2021, and its forecast for this quarter was weaker than expected.

This will be an interesting report to watch, given it is the cheapest of all big tech names trading at 22 times forward earnings.

In Q3, Meta expressed that advertising revenue in Q4 and beyond was likely to slow amid tougher competition and Apple’s privacy changes.

Investors should also look for further conversation around the Metaverse on the earnings call.

Finally, Amazon will report earnings after its biggest quarter of each year.

Wall Street expects strong revenues after the holiday period and robust sales during Black Friday.

The average analyst consensus has revenue growth of around 10% with USD$137 billion in revenue.

The key trend to watch with Amazon will be supply chain disruptions, but more importantly, the cost of labour.

During the holiday season, Amazon recruits hundreds of thousands of people, and the cost of doing so will be significantly higher this year, which could affect margins and earnings.