Already a subscriber?After an impressive six-month run, investors are being reminded that equity markets don’t just go up and to the right.
“If you are unclear, stop walking and start sniffing,” he said. “And with these numbers, we need to do more sniffing.”The market is waking up to the fact that there is little in recent US economic data that will allow the Fed to cut if it wants to protect its credibility. As Bank of America strategist Michael Hartnett says, good news for the US economy is suddenly bad news for markets, which are starting to worry the end of higher-for-longer rates is drifting out of sight.
The magnificent seven tech stocks – Alphabet, Amazon, Nvidia, Microsoft, Tesla, Meta Platforms and Apple – have become the magnificent five recently, with Apple and Tesla stock down year-to-date; Elon Musk’s electric vehicle giant has shed 40 per cent of its value this week.But there are cracks appearing elsewhere, too. Shares in Nvidia lost 10 per cent on Friday, taking its losses since its all-time high in late March to almost 20 per cent.
Could investors be worried about the earnings these companies are going to deliver? Combined profits for the magnificent seven are tipped to rise 38 per cent in the March quarter reporting season that is just getting under way, while combined profits for the remaining 493 companies in the S&P 500 are expected to fall by 3.9 per cent.