This week starts a move for equities, marked by various earnings reports overallsince nearly 30% of the companies in the S&P 500 will inform how much they earned during the first three months of the year. That includes several companies called “Magnificent Seven“, in addition to Tesla, which are responsible for most of the gains of that index Wall Street in 2023 and it is a fact that will end up being key for the Argentine Certificates of Deposit (Cedears).
Analysts consider those seven actions as a group that saw profit growth, but slowed to 39% from 63% at the end of last year, according to estimates by the Bank of America (BofA). And, in a context in which concerns linked to geopolitical tensions and persistent inflation hit the New York market with vehemence, as we enter the first quarter earnings season, the market is studying whether the technology giants will be able to continue driving their income. shares.
As noted, these mega-cap giants, which include Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA), They were big winners in the last year. But, since the beginning of April, the story changed.
And as the investment advisor explains, Gastón Lentini to Ámbito, “the Magnificent 7 became four in March.” It is not a calculation error, but rather it refers to the fact that expectations were changing and, in some cases, such as that of Tesla, its departure from that select group was confirmed as a result of the latest results presented.
“This week we will continue to see new balances, but we must expect benefits less robust in these large companies and better performance in the remaining 493 companies that make up the S&P500“, Lentini slides.
It is worth mentioning that the ceears that would be reached by the presentation of results are those of: Verizon, Tesla, Spotify, Ford, IBM, Microsoft, Alphabet (Google), Harley-Davidson, Tenaris and Exxon Mobil, among other giants.
Between hawks and few cuts
Likewise, it should be noted that the market now expects the Federal Reserve be more aggressive and possibly delay its plans to cut interest rates. At this point, it is difficult to imagine three rate cuts within the year, which was the prevailing expectation until very recently. A decision in this regard is now expected to arrive towards the end of the year.
However, many of these questions will be answered in the coming days, when the first quarter earnings season ends, especially when all the numbers coming from the bigtech.
As explained Thomas Ambrosettidirector of Guardian Capital to this medium, “inflation still remains at high values and, as the Fed says, it is a problem that persists and is not yet resolved.” The strategist maintains that the market takes this as a discouraging data for equities, where rates were expected to begin to fall at the beginning of this year.
“It seems that we are in a scenario of high rates for a longer time than expected. This leads investors to exit variable income to position themselves in fixed income, capturing that attractive rate,” says Ambrosetti.
It is worth remembering that the Nasdaq index suffered its sixth consecutive fall on Friday, which coincides with the views of the analysts consulted by this medium, with a market apparently determined to get away from riska strategy that becomes relevant before earnings season.
However, Lentini seeks to provide some calm and assures that this correction has been expected since last year. Therefore, to his clients, he reiterates the idea of ”be cautious, first in the positions of big technologies and then in benchmark indices, such as the Nasdaq or the S&P500“.
Wall Street: what to expect for Cedears
Diego FerroCEO of M2M Capitalindicates that the constant commentary in the United States is that, unless the economy continues in a surprisingly strong way or incomes are high enough, “At some point, the market has to react to stock prices implying an overly optimistic reality.“.
Ferro maintains that, with the Magnificent Seven behind most of the market increase, the current one could be “a vulnerable moment“. The US-based strategist maintains that what is happening is that the psychology of the market is fragile and, since October of last year, the situation was that ““Nobody wanted to miss the bigtech party.”. That is why, “the high prices generate higher prices“, Explain.
Thus, for the analyst, after last week’s correction, investors entered a “tough moment, psychologically” speaking. Ferro also maintains that There are reasons for the market to continue falling “because it is expensive, but there is no short-term weight driver.” But he doubts that there will be many people buying at these levels, therefore, and in line with Lentini, Ferro considers that it is a time to be cautious with the United States market, especially given the geopolitical risk.
For the reasons stated, stocks, in general, seem to be expensivewhich could translate into a drop in cedars locally, in part, due to the fever that exists on Wall Street around everything related to the development of artificial intelligence (AI). Some analysts suggest stock prices could continue to advance as AI mania heats up, but those surveyed by Ambit They suggest signs of wear and tear for the technology, so they warn that it is best to operate with caution.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
