Earnings season: how company reports move ES and NQ
What an earnings report is, why one giant company can move the whole index, beats vs misses vs guidance, and how day traders should handle earnings weeks.
Four times a year, the biggest U.S. companies report how much money they made. These weeks are called earnings season, and they can move ES and NQ as much as any Fed meeting, especially when one of the giant tech companies reports. Here's what to know, even if you never trade a single stock.
What an earnings report is
Every public company reports its results each quarter: revenue (sales), earnings per share (profit divided by the number of shares), and often guidance, which is what the company expects for the next quarter. Most big companies report either before the market opens or after it closes, so the reaction shows up in futures overnight and at the next open.
Why a single company can move the whole index
The S&P 500 and Nasdaq 100 are weighted by company size, and a few giant companies make up a large share of each. See stock indexes explained. When one of them jumps or drops sharply after earnings, it can pull NQ by a meaningful amount on its own, and other companies in the same industry often move with it.
Beats, misses and guidance
| The company… | What it means | But watch out |
|---|---|---|
| Beats expectations | Results came in above analysts’ forecasts | The stock can still fall if the beat was smaller than hoped |
| Misses | Results came in below forecasts | It can still rise if the bad news was already expected |
| Raises or cuts guidance | It changes what it expects next | Often moves the stock more than the results themselves |
It's the same lesson as with CPI: the market moves on the surprise against expectations, not on whether the news sounds good. See what moves the markets.
What it means for a day trader
- Know which big companies report this week. Any earnings calendar lists the dates and whether it's before the open or after the close.
- Expect gaps. When a giant reports after the close, ES and NQ can open far from where they closed. Your levels from yesterday may not hold.
- Don't hold through a big report if you're a day trader. The overnight gap can skip right past your stop.
- Watch the first minutes after the open on those days. Volume and volatility are higher; size down until the market settles.
Next in this series
Next: the VIX, Wall Street's fear gauge. Previous: the dollar, oil and gold.
This article is for education only and isn't financial advice. Trading futures involves substantial risk of loss.