The S&P 500 is up about 3% to start the first quarter of 2023. On the surface things look good. But what if we look ‘under the hood’. Most sectors are lower – especially those which are economically sensitive (like banks, energy, small caps and materials). However, big tech is carrying the market higher. That’s not necessarily a good sign.
Big Tech
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Bear Market Rally? Or Something More?
About 100 of the 500 S&P companies have reported Q4 2022 earnings. TL;DR is they are ‘average’ at best. Most have barely met already lowered expectations. What’s more, forward guidance is weak. However, the bulls are betting on inflation continuing to plunge forcing the Fed to cut rates later in the year. I’m not yet prepared to support that thesis… with services inflation still running at 5.2%. There are some signs things are improving.
Fed Aftermath
Apple, Amazon, Microsoft and Google have all been crushed post earnings. Apple is the ‘best’ performer – down approx 13% the past two weeks. What’s next for large cap tech? I see more downside… and this post explains why.