Stocks see lowest volume of 2022 in tech-led slide - BNN Bloomberg

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Stocks slumped, with traders positioning for a hot inflation reading and the start of a key earnings season that may provide clues on whether the economy is headed toward a recession. The dollar climbed.

A selloff in megacaps like Tesla Inc. and Apple Inc. weighed heavily on the equity market -- which saw its lowest trading volume of 2022. Twitter Inc. plunged 11 per cent as Elon Musk walked away from his US$44 billion deal to buy the company, setting the scene for a legal battle. The euro edged closer toward parity with the greenback, while 10-year US yields dropped below 3 per cent.

Maley noted that stocks are trading at valuation levels that are seen as highs -- not lows. The current price-to-sales metric, for instance, is at the same level of market tops in 2020, 2018 and at the tech bubble in 2000, he added. Billionaire investor Leon Cooperman said that a stronger dollar is indeed “negative for corporate profits.” In fact, several firms like giants Microsoft Corp., Costco Wholesale Corp. and Salesforce Inc. have also bemoaned the impacts of the US currency’s meteoric ascent.

Meantime, Citigroup Inc. strategists pointed out that there’s a strong correlation between the Fed’s rate trajectory and earnings growth. They said it’s been common for profits to rise as the Fed tightens its policy, and to contract when the central bank switches to easing in response to economic weakness.

Results from the FAANG cohort of megacaps like Facebook owner Meta Platforms Inc. and Google’s parent Alphabet Inc. won’t come out until later this month. But investors are getting ready for heightened volatility as profit cuts by industry analysts have been lagging, leaving room for big surprises and dramatic post-earnings moves.

 

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