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Thursday, October 27, 2022
The major indexes are recovering for the seventh time this year, potentially exiting a nearly six-month bear market. Dow Index (^ DJI), Nasdaq Composite (^ IXIC), S&P 500 (^ GSPC), and even Russell 2000 (^ RUT) both increased from 9% to 11% when the bulls flashed First signs of greed since August.
Mega cap earnings this week will determine whether the rally continues. The top 20 components of the S&P 500 by market capitalization represent 4% of the index by volume but nearly 40% of the index by weight. This over-representation gives each mega cap a disproportionate impact on the market.
So far, it looks like the big hats could get in the way of the rally. This week, poor results from Alphabet (GOOG, GOOGLE), Microsoft (MSFT) and Meta Platform (META) yes weigh on key indicators. Parent company Google closed down 9.1% on Wednesday, marking its worst day since the 2020 pandemic low. Apple (AAPL) reported after the closing bell today.
Eight of the top 20 companies in the S&P 500 have lost more than $100 billion in market capitalization as of Wednesday — with Microsoft down $780 billion, Alphabet $650 billion and Meta Platforms $555 billion. Nvidia, Apple and Amazon have all lost more than $400 billion since the beginning of 2022.
Apple is expected to report quarterly revenue of $88.6 billion, of which $15.7 billion will come from the larger China. With all the hype surrounding the iPhone 14, it’s easy to forget that multinationals like Apple are also suffering because of the strength of the US dollar (DX-Y.NYB).
Meta initially fell as much as 14% after Wednesday’s bell after lowering its sales forecast for the current quarter – partly due to forex-related difficulties.
Overall, the technology, media services and consumer discretionary sectors all fell about 30%. At the same time, the energy and healthcare sectors are on the rise.
Exxon Mobil (XOM) added more than $190 billion to its market capitalization, while Chevron (CVX) grossed nearly $120 billion. Pharmaceutical company Eli Lilly & Co. (ONLY) and the insurance company UnitedHealth (UNH) have added about $80 billion and $40 billion this year, respectively. For the broad-based rally to continue, they’ll likely need some help from big tech stocks.
What to watch today
8:30 a.m. ET: Annual GDPQoQ, 3Q A (2.4% expected, -0.6% previous)
8:30 a.m. ET: Durable ordersPreliminary September (0.6% expected, -0.2% last month)
8:30 a.m. ET: Personal consumptionQoQ, 3Q A (1% expected, 2.0% prior)
8:30 a.m. ET: Durables does not include transportationPreliminary September (0.2% expected, 0.3% last month)
8:30 a.m. ET: GDP price indexQoQ, 3Q A (5.3% expected, 9.0% ahead)
8:30 a.m. ET: Non-defense capital goods orders do not include aircraftPreliminary September (0.2% expected, 0.3% last month)
8:30 a.m. ET: Core PCEQoQ, 3Q A (4.6% expected, 4.7% prior)
8:30 a.m. ET: Initial unemployment claimsweek ending October 22 (225,000 expected, last week 214,000)
8:30 a.m. ET: Continue Claimingthe week ending October 15 (1.385 million in the previous week)
11:00 a.m. ET: Kansas City Manufacturing IndexOctober (expected -2, 1 in the last week)
Amazon.com (AMZN), Apple (AAPL), Altria (MO), Ares Manager (Ares), AutoNation (ONE), Caterpillar (CAT), Capital One (COF) Comcast (CMCSA), CubeSmart (CUBE), Gilead Science (GILD), Hertz Global (HTZ), Honeywell (HONOR), Intel (INTC), Keurig Dr Pepper (KDP), Master Card (GHOST), McDonald’s (MCD), Merck (A), Northrop Grumman (NOC), Oshkosh (OSK), overstock.com (OSTK), Pinterest (PINS), Royal Caribbean (RCL), S&P Global (SPKE), Shopify (SHOP), Southwest Airlines (LOVE), T. Rowe Price (TO TRY ON), Twitter (TWTR), T Mobile (TMUS), Willis Towers Watson (WTW)
Highlights of Yahoo Finance