Nasdaq gives up gains and threatens seventh straight day of decline

It’s a huge week for the Nasdaq with earnings from Tesla, Meta, Microsoft, Alphabet, Intel and Snap. At the moment, the market is clearly worried and chipmakers are particularly lenient.

The Nasdaq has fallen for six straight days and today’s early gains have evaporated and the index is now trading flat.

Zooming out, there is a saying that “bull markets go up the escalator and correct themselves in the elevator.” This means that in bull markets there are often steady gains interrupted by sharp corrections. This is the sort of thing we are seeing right now and it gives me confidence that we are still in a bull market, despite the gloomy mood.

We’ve also seen a few times in recent years where tech stocks sold off ahead of earnings, then rebounded when they weren’t as bad as feared. That said, the bar is high for some of these companies, especially mega-cap tech and chip makers. Last week, Netflix reported strong profits, but they still collapsed and are still down 0.7% today.

A big problem is rising Treasury yields. The catalyst for tech will likely be a decline in U.S. economic data, and inflation in particular. There are still many reasons to believe this will happen.

Here is the CFO of Bank of America:

“So you see the consumer staying there and continuing to spend, but at a level that is more consistent with a trendier type of economy and we’ll see all of that play out over the next quarter… if you just extend that from the fourth quarter of 2019 to date, given that the economy is 30% larger, we kind of feel like the consumer is approaching that bottom, so we’re still confident that the second quarter will be… the third could be the turning point for the consumer. You can see it’s slowing down now. »

Here is the CFO of American Express:

“Overall, although we continue to see a softer spending environment

Here is the Discover CFO:

“Sales slowed across all categories, with the largest decline occurring in the everyday category, which includes supermarkets, gasoline and wholesale clubs. As we continue to add new accounts, we generally see cardholders spending less, particularly among lower-income households who are most affected by the cumulative effects of inflation. Based on period trends, we expect sales to be flat to slightly negative this year.