Nasdaq lost half of its trillionaires (October 28, 2022)

The dumping of technology stocks, which started on Tuesday’s post-market, when Microsoft and Alphabet stocks collapsed after reporting, continued yesterday. Now the fall was dispersed by the results of the quarter, published after the close of the main trading session on Wednesday – and the Nasdaq Composite closed the day in the red by 1.63%.

Today the market will be pressed by what came out on Thursday evening. The attitude to this is again known – in the postmarket, the shares of two more companies with a capitalization exceeding $1 trillion collapsed., which lost 4.1% by the close of major trading, fell an additional 21% after it released a disappointing sales forecast. Its capitalization, which at the close of Thursday was $1.13 trillion, fell below a trillion dollars for the first time since April 2020 and reached $892 billion.

In just a few minutes, $238 billion was lost – one of the largest such cases in history. Later, shares recovered part of the fall and showed a decline of only 13%. But it still left the company’s capitalization below the cherished bar.

So the quartet of American members of the Trillion Who Club turned into a troika. Once upon a time there were six of them, but the deflating bubble in the stock market is steadily thinning the ranks of both ordinary billionaires and trillionaires.

Apple, whose capitalization exceeds $2 trillion, does not yet face such a fate. However, after losing 3.1% in the main trades yesterday, its shares then fell another 5.4%. The company beat forecasts on revenue and earnings, but reported lower iPhone sales than analysts had expected.

Later, its shares also rebounded and even went up a fraction of a percent in relation to Thursday’s close. The papers of the largest US corporation by capitalization generally endure this bear market relatively well. From the beginning of 2022 to Thursday’s close, they lost just 18.5%.

Until recently, this would have sounded completely ridiculous. But now it’s not like that. The Nasdaq Composite fell 31% over the same period, Alphabet fell 36.3%, Microsoft fell 32.6% and fell 33.4%. And all of them yesterday, I must say, fell both in the main session and in the postmarket.

Two way market

But, no matter how strange it looked, against such a background, the Dow Jones Industrial Average grew for the fifth day in a row. Yesterday it gained another 0.61%.
This has been going on since Friday, when markets concluded that the Fed would cut its pace of rate hike soon due to financial stability risks. Analysts are now practicing writing scripts for the regulator’s November 2 meeting.

Bank of America, for example, writes that the Fed will, of course, discuss everything behind closed doors and raise the rate to the 75 bp expected by the market. But then Jerome Powell casually admits that the debate about slowing down the pace of monetary tightening did take place.

“But the chairman will counterbalance this by saying that no decision has been made, and ultimately it will be based on changes in data between meetings,” analysts say. – We think this will be a sufficient signal for the markets that the Fed is inclined, but not committed to raising rates by 50 bp. in December”.

Yesterday, the growth of quotations of non-technological stocks was also supported by the preliminary report of the US Department of Commerce on GDP. He said that after falling for two consecutive quarters, it rose in the third by 2.6% year on year.

In the current situation, these statistics could no longer seriously affect the estimates of the prospects for monetary policy. However, she managed to inspire confidence in some buyers of stocks in companies from traditional industries. Nevertheless, they do not discount the recession, so purchases in defensive sectors, such as utilities, were very noticeable.

“It’s a bifurcated market, a ‘tale of two cities,'” Tim Grisky, senior portfolio strategist at Ingalls & Snyder, told Reuters yesterday. “There is a lot of pressure on technology and associated names, as well as on growth stocks. But on the other hand, strength is visible in other sectors, in particular in consumer goods, energy, finance, industry and utilities.”

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