We’re Goin’ Dow(n), Dow(n)…
The recent market slump continued into this week as the Dow fell 600 points alone on Wednesday. Lead by massive dips in tech, the S&P dropped nearly 3% while Nasdaq, which lists many of our country’s largest tech companies, fell 4.4%.
Many analysts are warning that the constant red days have pushed stocks into the ‘correction territory; from its previously claimed ‘pullback territory’.
Continuous political disarray, from volatility in oil markets to global trade tensions, has left investors more worried than we’ve seen thus far under Trump’s presidency, as more individuals continue to seek safer assets. The major indices’ annualized returns are now in the red.
President Trump continued to state his displeasure with Fed Chair Jerome Powell on Tuesday. There have been 2 interest rate hikes under Powell, whom Trump chose himself, as the Fed has attempted to utilize contractionary fiscal policy to manage our booming growth and rising inflation.
Trump stated, “I’m very unhappy with the Fed” and specified by saying that Powell “almost looks like he’s happy raising interest rates.”
He even went as far as to claim Obama, who presided over the US’ worst economic crisis since the Great Depression, was lucky to have “zero interest rates.” Trump went on to explain that “it’s too early to tell, but maybe” he regrets appointing Powell.
A Tale of Two Earnings Reports
With earnings szn on the horizon, let’s take a look at a few notable earnings reports this past week and the vastly different results they yielded.
Tesla (TSLA) was expected to post losses of $0.03 per share, however, they shattered expectations, posting brilliant earnings of $2.90 per share. The Model 3 was the best selling US car in terms of revenue, as well as the 5th most bought car in the US. Tesla jumped nearly 12% after hours before settling in at 9% gains for the day on Thursday, and is trading up nearly 21% since Monday!
With so much controversy following their CEO and former chairman of the board, Elon Musk, Tesla’s rollercoaster of a year continues, however, at least it’s heading towards the green for now.
Wall Street darling, Advanced Micro Devices (AMD), was posting over 140% annualized returns just a couple months ago, however, after poor performance after hours on Wednesday and continued losses in the rest of tech, AMD now sits at 50% returns in the last 12 months.
AMD has been hurt by the loss in demand for cryptocurrency, since its chips are one of the leading pieces of tech used in mining crypto. AMD fell over 15% following the poor guidance after hours on Wednesday.
E-commerce giant Amazon (AMZN), which with a market cap of over $800 billion is one of Wall Street’s biggest movers in terms of sheer size, dealt another blow to markets Thursday, as it surprised investors and reported missed earnings.
Missed revenue targets in retail and concerns over a lackluster holiday season put downward pressure on the stock, despite many of Amazon’s technological products, such as its cloud and advertising services, showing strong increases in growth and profitability. Following the news, shares of Amazon dove 9% in after-hours trading Thursday.
Amazon is down nearly 12% on the month, an abrupt turnaround from last month, when Amazon hit record highs and joined Apple to become the world’s second trillion-dollar company in what was a miraculous year of growth. At its peak, Amazon comprised nearly 40% of the S&P’s growth for 2018. If anything, Amazon’s halt is indicative of a reassessment of a highly bullish tech sector.