Wall Street might have ended Friday somewhat mixed, but there’s no quibbling that something nefarious is in the New York air.
Last week, the shooting star of the Really Quite Terrific Up To A Certain Point Seven – Nvidia (NVDA) – fell to earth at a steep gradient somewhere near 14% over the previous five sessions.
It was almost Tesla-like.
The capitalisation of wastrel legacy firm Exxon Mobil (XOM) just overtook Elon Musk’s carmaker which, pardon the pun, looks to be running low on batteries.
That’s a handy reflection of the revivified struggle on Wall Street twixt the old and the new world.
The Nasdaq closed last week wearing its sixth straight slip-up, Wall St traders it would appear have taken a brief look at where the wind is blowing and decided that turning turkey is the preferred posture ahead of what now shapes up as a scary Q1 earnings season.
Many of the magnificent mega names are up.
And the audience has just watched the tech-heavy index endure its lengthiest slump in over a year.
Apple, Microsoft, Google-daddy and Facebook-mummy all slipped more than 5%.
The semiconductor sector, beyond Nvidia, felt the ground opening up under its feet after Taiwan Semiconductor Manufacturing’s (TSMC) downward revision of forecasts.
Surely Big Tech couldn’t be oversold?
While concerns linked to geopolitical tensions and persistent inflation hasn’t helped, heading into the Q1 earnings season, the market will be watching whether tech powerhouses like the Magnificent Seven can energise stocks.
These mega-cap tech giants consisting of Alphabet (GOOG, GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA) have been big winners over the past year.
But since the start of April, the song has been out of tune.
On Friday the Nasdaq utterly quailed, losing well over 310 points, or 2.1%, to close at 15,282.01.
The techy-index got pantsed by the more than 10% pantsing of chipper Nvidia and the 9% decline in Netflix (NFLX) pant size.
With the waistline of both tech giants tightening quickly, the broader S&P 500 also struggled to hold its line, losing 45 points, or 0.9%.
Notably, both indices have fallen for six consecutive sessions days, with the S&P 500 dipping below 5,000 on Friday.
The Dow Jones Industrial Average, however, managed a 0.4% gain, adding 211.02 points, or 0.56%, thanks to American Express’s (AXP) post-earnings rise of over 5%.
For the week, the S&P500 lost more than 3%, that was its very worst weekly performance since March 2023.
The S&P500, which as posted three straight weekly losses, is now down more than 5% from its 52-week high. The Nasdaq Composite fell 5.5% for the week, logging its fourth straight down week and its longest negative streak in more than two years. For the week, the Dow gained 0.01%, with the blue-chip index posting its first positive week of the last three week.
On the data docket, it’ll be US personal income and outlays report, due Friday. The data will also contain breadcrumbs on the Federal Reserve’s preferred inflation gauge – the personal consumption expenditures price index. Also, Thursday will see the publication of the first estimate of US GDP growth in Q1.
Following last week’s depressing expansion of direct hostilities between Israel and Iran, Wall St will likely continue to be on a terrifying edge as they juggle geopolitics and the re-emergence of an old enemy, briefly considered vanquished.
Rates at the gates
The big story is the temporary disappearance of hopes of a rate cut in the United States, which reopens some wounds and new conjectures. Too much inflation for the Fed to be comfortable. Even the doves at the central bank had to make up their minds: they erred on the side of optimism.
Treasury yields and oil will be on watch.
The stock markets took a little time to understand that, this time, it’s serious. If monetary policy does not take a more favorable turn, at least not immediately, it is logical that technology stocks would suffer first.
And since these are the ones that carry the heaviest weight, by far, in the United States, we find ourselves with indices at half mast.
Well, unless you are lucky enough to host UnitedHealth, but that’s anecdotal.
Endless US Earnings which really matter
A huge chunk of this week’s spotlight will be dominated by the US Q1 earnings season, which will heat up and see hundreds of companies announcing their numbers.
The biggest names set to report include “Magnificent 7” stalwarts, ofc.
Wall Street reckons Tesla will earn 51 cents per share on revenue of $22.34bn. This compares to the year-ago quarter when earnings came to 85 cents per share on revenue of $23.33bn
Unlike its Magnificent 6 mates, Tesla has hated 2024. TSLA stock’s down 40% year to date.
That doesn’t compare well with the 5% rise in the S&P 500 index. The shares have also fallen 14% in 30 days to a new 52-week low, while the S&P 500 index has fallen just 3%.
Deutsche Bank has lowered its rating on Tesla from Buy to a Hold citing the likelihood of the Model 2 launch being delayed in favor of prioritising the Robotaxi business.
US earnings to watch this week
Monday, April 22
Verizon (VZ), Truist (TFC), and Albertsons Companies (ACI).
Tuesday, April 23
Visa (V), Tesla (TSLA), PepsiCo (PEP), Texas Instruments (TXN), Philip Morris International (PM), UPS (UPS), Lockheed Martin (LMT), Mattel (MAT), and General Motors (GM).
Wednesday, April 24
Meta Platforms (META), IBM (IBM), AT&T (T), Boeing (BA), Chipotle (CMG), General Dynamics (GD), Hilton Worldwide (HLT), and Ford Motor (F).
Thursday, April 25
Microsoft (MSFT), Alphabet (GOOG), Merck (MRK), Caterpillar (CAT), Comcast (CMCSA), Intel (INTC), and Altria Group (MO).
Friday, April 26
TotalEnergies (TTE), Exxon Mobil (XOM), AbbVie (ABBV), Chevron (CVX), and Colgate-Palmolive (CL).
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