Mega-Cap Names Are Skewing Index Movements

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In his Daily Market Notes report to investors, while commneting on mega-cap names, Louis Navellier wrote:

Mega-Cap Names Skewing Index

The market bounces back from the worst day in the NASDAQ since Sep’20.

Equities had a breathtakingly weak day on Tuesday, led by Tesla Inc (NASDAQ:TSLA),  down over 10% on concerns that Elon Musk may sell some of his Tesla stakes to finance his successful $44B bid to take Twitter private.

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The Wall of Worry now consists of the Fed's planned fight against inflation threatening the US, the Ukraine conflict threatening Europe, and the Covid lockdowns in China threatening demand and logistics in the biggest buyer of oil & commodities.

None of these are new risks, but the perceived impact really took hold yesterday as selected earnings disappointments have investors cautious about more earnings to come.

After the close, Google reported weak results and the stock dropped 6% in extended trading while Microsoft beat expectations and is up 3.5% today. This morning, Boeing Co (NYSE:BA) reported weak results and is down over 10%. These corrections in mega-cap names are skewing index movements.

Opportunity In Slight Disappointments

Apple is down 10% on the month, Microsoft Corporation (NASDAQ:MSFT) -12%,, Inc. (NASDAQ:AMZN) -14%, and Alphabet (NASDAQ:GOOG) -14%. The correction is becoming more pronounced with the Dow down 10% from its 52-week high, the S&P 500 -13%, NASDAQ -23%, the Russell 2000 -23%, and the Dow Transports -19%.

On the positive front, the S&P is demonstrating better strength than the indexes are reflecting with overall earnings reported so far up 6.7% and revenues up 11.9%.

Estimates are rising in energy, airlines, and regional banks, and falling in consumer discretionary, communication services, and technology. On deck today are Meta (Facebook), Samsung, and Qualcomm.

Stocks attempted a bounce on the open but have since returned to the red while interest rates and energy prices are flat.

Earnings will continue to drive trends in the short term, with opportunities possible when the market punishes slight disappointments in strong companies.

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