Stock Pickers Face Mixed Bag From First Big Tech Earnings
(Bloomberg) — The lockstep moves that have gripped the US stock market this month look set to end — at least for a day.
A slew of big tech earnings reports sent shares in heavyweights Microsoft Corp. and Alphabet Inc. careening in opposite directions. The Windows software maker surged more than 5% after after its quarterly earnings showed revenue that topped analyst estimates, while Google’s parent slid by a similar amount on disappointing cloud revenue.
Texas Instruments Inc. and Visa Inc. also sped off on different tracks. The chipmaker slid 4.5%. while the payments processor gained 2.6% in after-hours trading. Snap Inc., the much smaller social media network, jumped as much as 24% before erasing those trade lower by more than 6%.
The moves virtually cancelled each other out at the index level. The largest ETF that tracks the Nasdaq 100 was essentially flat as of 4:45 p.m. in New York.
The divergence follows a streak of all-or-nothing stock-market days in which S&P 500 Index shares rose and fall in unison, reacting more to macroeconomic developments and geopolitical turmoil and less to company-specific news.
Those simultaneous gains and losses have complicated the lives of stock pickers, with only 37% of large-cap active managers outperforming their benchmarks this year through September, data compiled by Bank of America Corp. show.
“The mixed results – and mixed reactions to them – makes it harder to pick an index’s direction right now simply on the basis that earnings season will be good or bad,” said Steve Sosnick, chief strategist at Interactive Brokers. “Divergent moves dampen index moves and volatility.”
The moves come after a choppy few months for tech stocks, which have been under pressure as bond yield soar, geopolitical tensions escalate and the Federal Reserve keeps the possibility of another rate hike on the table. The Nasdaq 100 Index is down 7% since hitting a peak in July.
From here, analysts and investors will be watching for earnings reports from the rest of the top megacap technology stocks. Amazon.com Inc is scheduled to report quarterly earnings after market close on Thursday, and Apple Inc is set to release its results a week later on Nov. 2.
Following these results, investors will have a bunch of different data sets to formulate their next bets on technology.
“If the market is mixed, odds are some will go up while others go down, dampening your performance,” Sosnick said. “If you get the majority right, you’re a hero.”
–With assistance from Elena Popina and Matt Turner.
©2023 Bloomberg L.P.
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