Stock Market Update Thursday 26, 2023 The Dynamics of "Magnificent Seven": Analyzing Recent Market Trends, Meta recently emerged as the newest entrant to the prestigious "Magnificent Seven" club. However, it wasn't all smooth sailing. Despite a marginal dip in its guidance, Meta's stock experienced a significant slump. One might wonder, is this reaction justified? Particularly when giants like Google face a similar fate upon even a hint of wavering guidance - a response quite contrary to previous market behaviors where such guidance would have been largely ignored.
An Insight into the 10-year Treasury Yield:
From August 1, 2023, the 10-year Treasury yield witnessed a remarkable ascent, soaring from 3.97% to 4.97%. This surge in interest rates has inevitably cast a shadow on the S&P 500 EPS projections. Alarmingly, the 4Q 2023 EPS predictions are plummeting at a pace surpassing the last earnings season's deceleration. A tangible weakening trend in the S&P 500 EPS predictions is manifesting, signaling the rationale for dwindling stock prices and a suppressed market multiple. Echoing these predictions, the S&P 500 underwent an 8.95% decline post the Fitch downgrade.
A select group of high-valued tech stocks has remained the bedrock of the market for over a year. Yet, one after another, these titans are showing signs of susceptibility. Apple, the last bastion in this lineup, is not expected to escape this scrutiny either. Historically, Apple has managed to navigate through with its typical downplay of expectations or subtle indications. However, this quarter might challenge this norm, potentially resulting in a hit to its stock price - though this remains speculative at this juncture.
A Glimpse into Today's Market Movements
While the indices portrayed moderate resilience initially, a mere hour into trading saw the undercurrents of volatility pulling them down. By midday, the S&P declined by 1%, with the Nasdaq registering a steeper 1.75% drop, even amidst a rebound in fixed income. Although the market did attempt to recuperate these losses by the day's end, it managed only a slight recovery.
Diverging from equities, both fixed income and green paper observed an uptick. The metals sector experienced robust performance overseas, with gold nearing the coveted $2,000 mark. Yet, in the New York trade sphere, these gains reversed into a 0.5% loss, ostensibly due to bolstered GDP data. Despite this setback, gold recouped to close with a $5 uptick. Silver, tracing a parallel trajectory, concluded with a 0.5% decline.
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