Major stock indexes slipped to their lowest levels since May this week as the biggest technology companies struggled to hold on to the broader market’s gains, which are on full display amid the ongoing third-quarter earnings season. topic is.Thank you for reading this post, don't forget to subscribe!
The S&P 500 and the tech-heavy Nasdaq closed Wednesday at their lowest levels since May, falling 0.5% and 0.9%, respectively, as of 10:30 a.m. Thursday.
The S&P is now 9% below its July peak, just shy of the 10% correction zone, and the Nasdaq is 11% off its July high.
The breakdown comes as the “Magnificent Seven” big tech stocks — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — failed to support a broader 2023 rally, with those seven stocks down an average of 11% since July 31. There has been a decline.
The conglomerates’ inability to hold onto the market is on full display as firms report earnings: The seven tech giants’ profits are set to rise 33.1% and revenues 10.9% year-on-year, according to research published Thursday by Bernstein Quantitative. Have an estimate. Analyst Ann Larson found the 8.6% profit contraction and 0.3% sales growth dwarfed the 8.6% profit contraction of the remaining 493 S&P companies.
As a result of the limited breadth of growth, S&P is projected to report a 3.1% decline in overall third-quarter profits and a 1.5% increase in sales.
Of the 29% of all S&P companies reporting earnings as of Tuesday, Q3 profits rose 2.6% and sales rose 1.2% year-over-year, according to LSEG data, led mainly by Alphabet, Microsoft, Meta and Inspired by Tesla’s mediocre Q3. Profit and revenue gain of 4% and 9% respectively.
,Earnings are not providing the proverbial ‘ray of sunshine’ they did in Q1 or Q2, Sevens Report analyst Tom Essay wrote to clients on Thursday. Essay said, “This has not been a good earnings season” and “potentially signals a slowing economy.”
The S&P rose nearly 30% and the Nasdaq surged nearly 40% from its October 2022 low to its summer high, thanks almost entirely to a surge in valuations of the most valuable tech stocks, giving the group the “Magnificent Seven.” “The nickname was received because the Bulls caught on. Their wagons to the companies at the forefront of the artificial intelligence revolution. Some strategists pointed to the narrowness of the gains as a worrying sign, and ultimately the surge in momentum for big tech caused the broader market to give up most of its gains.
Despite a slowdown in earnings growth outside of big tech, companies actually topped analysts’ estimates this quarter; According to LSEG, 80% of reporting firms as of Tuesday kept profit estimates for the third quarter above the historical rate of 67%, a sign of companies facing less disruption amid a volatile macroeconomic environment.
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Three of the Great Seven have not yet reported Q3 earnings. Amazon will report Thursday afternoon, Apple on Thursday and Nvidia on Nov. 21.