(Bloomberg) — A decline in the world’s biggest technology companies has hit stock prices, with Wall Street traders bracing for a flood of earnings from the industry that has supported the bull market.
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Stock prices extended their record declines, with the S&P 500 below 5,000 and the Nasdaq 100 down more than 2%. More than half of the Magnificent Seven group of tech companies are scheduled to report earnings next week, leaving investors wondering whether they can live up to the high expectations for artificial intelligence. Just Friday, AI darlings Nvidia Corp. and Super Micro Computer Inc. fell at least 10%.
Earnings for the seven leading growth companies in the S&P 500 (Apple, Microsoft, Alphabet, Amazon.com, Nvidia, Meta Platforms, and Tesla) are expected to rise 38% in the fiscal year ending March 2016. According to Bloomberg Intelligence, the first quarter. Excluding these, the benchmark index’s remaining returns are expected to contract by 3.9%.
“Investors are not only expecting strong results, but also strong guidance,” said Quincy Crosby, chief global strategist at LPL Financial. “Disappointments in coverage of big tech names could push this week’s oversold market further into oversold territory.”
The S&P 500 fell for the sixth straight session, its longest losing streak since October 2022. Nvidia’s plunge wiped out more than $200 billion in value. The Nasdaq 100 had its worst day of the year. Netflix Inc. lost its shine and fell following management’s decision to stop reporting quarterly subscriber data.
The yield on the 10-year U.S. Treasury note fell 1 basis point to 4.62%, nearly erasing an earlier drop of 14 basis points. Oil rose only slightly as Iranian media appeared to downplay the impact of the Israeli attack.
The tech industry came under heavy pressure this week after Taiwan Semiconductor Manufacturing Co. cut its outlook for chip market expansion and ASML Holding NV posted disappointing orders. The developments have raised concerns that they could be a sign of things to come as other major companies prepare to report results. Intel’s statistics are expected to be released next week.
Along with geopolitical risks, hot inflation statistics and hawkish FedSpeak overtones, these fears surrounding the stock market’s most powerful group are making trading volatile.
The S&P 500 index had its worst week since March 2023, with its drawdown from its all-time high widening to more than 5%. After the index’s strongest start to the year since 2019, investors are increasingly skeptical about how far the market will rise in the short term, even given the continued strength in the economy. It has become.
“Geopolitical and political uncertainties, along with inflation, interest rates and the Federal Reserve, are putting pressure on the market, leading to rapid and dramatic shifts in market complexion and investor attitudes,” said Nationwide’s Mark Hackett. “
Investors are pulling money out of stocks as a strong U.S. economy and persistent inflation raise concerns that the Federal Reserve will keep long-term interest rates high, Bank of America strategists say. .
The team led by Michael Hartnett said that good news for the economy has turned into bad news for stock prices, a change in thinking from the first quarter when “good news = good.” Citing data from EPFR Global, BofA said evidence of that was the $21.1 billion that investors redeemed from equity funds in the two weeks ending Wednesday, the highest amount in a two-week period since December 2022.
Sinead Colton-Grant, chief investment officer of BNY Mellon’s wealth management division, said the retreat of the U.S. stock market from its all-time high late last month has given investors hoarding cash more room to buy. It is said that it is given.
He said the three-week decline in the S&P 500 was a healthy consolidation by traders after it soared 10% in the first quarter and rose 24% in 2023.
Colton Grant expects the rally to not only resume from here, but expand based on strong earnings growth and continued economic momentum, with the S&P 500 index at the upper end of its target range of 5,000 to 5,400 before the end of 2024. We predict that it may exceed.
Company highlights:
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American Express Co. reported stronger-than-expected earnings for the first three months of the year as consumers continued to flock to the company’s premium credit card products.
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Trump Media and Technology Group is asking Nasdaq regulators to intervene, saying illegal short-selling may have been behind the stock’s collapse.
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Procter & Gamble Co., the maker of Pampers diapers and Dawn dish soap, reported quarterly sales that fell short of Wall Street expectations, overshadowing its improving profit outlook.
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SLB, the world’s largest oilfield service provider, disappointed investors by failing to translate the sharp rise in oil prices in the first quarter into strong shareholder returns.
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The Federal Aviation Administration is investigating an incident in which a passenger appears to have been given unauthorized access to the cockpit on a United Airlines Holdings charter flight from Denver to Toronto.
The main movements in the market are:
stock
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As of 4 p.m. New York time, the S&P 500 was down 0.9%.
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Nasdaq 100 falls 2.1%
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The Dow Jones Industrial Average rose 0.6%.
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MSCI World Index falls 0.8%
currency
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Bloomberg Dollar Spot Index little changed
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The euro rose 0.1% to $1.0655.
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The British pound fell 0.5% to $1.2373.
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The Japanese yen remained almost unchanged at 154.61 yen to the dollar.
cryptocurrency
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Bitcoin rises 1.2% to $64,297.01
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Ether rose 1% to $3,101.31
bond
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The 10-year Treasury yield fell 1 basis point to 4.62%.
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German 10-year bond yield remains unchanged at 2.50%
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UK 10-year bond yields fell 4 basis points to 4.23%.
merchandise
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West Texas Intermediate crude rose 0.6% to $83.22 a barrel.
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Spot gold rose 0.4% to $2,387.75 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Jessica Mentone, Farah Elbalawy, Alexandra Semenova, and Esha Day.
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