If you don’t believe that the Big 7 stocks don’t have an impact, last week was the worst performance for the NASDAQ index since 2022. The Big 7 have a far greater impact on the NASDAQ while more value-oriented stocks have a bigger impact on the Dow, which actually performed great in comparison.
Everyone is oblivious when the trajectory is up.
We will get an even greater measure this week as Apple, Microsoft, Meta (Facebook) and Alphabet (Google) will report earnings.
Tesla will report its earnings, but with the reduction in prices and loss of executives, not much is expected to reverse the downward spiral of the company.
Crypto hounds are all a buzz over the prospect of Bitcoin splitting the shares.
This used to be a true formula for higher prices.
Of late, the opposite has been the case.
Beyond the earnings reports, we will get the Federal Reserve’s core price index released Friday with expectations that it will come in around 2.2%.
The problem of late is that expectations have been wrong.
There is a growing feeling that we may not get a rate reduction at all this year.
To further that point, it appears that the unemployment rate will remain below 4% and wages will continue to climb. Many were dismissing the need for a rate cut as the market was ignoring higher rates and climbing.
With bond rates at 4.75%, more investors may be enticed to pull funds from equities and place them in bonds with guaranteed yields.
It has not happened yet, but it would not take much for a shift to happen in a big way.
I am pleased to see the markets more focused on actual reported earnings than the outside noise of world events and politics.
I am not sure this can go on forever, but it does give some faith in investors keeping their eye on the prize of earnings growth.
I do think that it won’t take much to move the S&P back below 5000 and where it would stop is anybody’s guess.
For quite some time, a pullback was an opportunity to buy back in.
Cathy Woods at Ark Investments has made sizeable gains doing such since October.
Her big bets of late on Tesla will be a real test.
I would welcome a real correction to create value in this market, but I find it hard to believe that will be the case.
The love of AI seems to outweigh any real logic. The earnings however cannot be ignored and shouldn’t.
So far the earnings have been the fuel and justifiably so.
As such, I will take my near 5% return on Treasuries and wait.
It is not fun, but I’m way past the vintage for fun with my savings.
I save the fun for golf, hunting and fishing.
A bad day at one of those is still time spent with a friend laughing.
"There is much to evaluate, hard choices to make" by: John Sample
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