S&P 500 rally after touching the correction territory, deleted today’s loss
These gains continued late last year, although food and gas prices rose at a pace not seen for many years, along with wages, and despite the hurricane of the coronavirus pandemic. Speculators had also turned to investments as varied as cryptocurrencies, real estate and even trading cards and other collectibles, which had frightened many who saw signs that investors were getting carried away.
So a price slump that removes some of that profit was long overdue, many market watchers said.
“We have not had a correction in a long time,” said Lindsey Bell, chief financial and marketing strategist at Ally Invest. “Although this sale in the last couple of weeks feels uncomfortable, the good news is that the sooner you have a sale or correction as we see today, the earlier and the more likely you are to make up for lost ground before the turn of the year. ยป
This does not mean that it will not be a bumpy year for equity investors. The growth in the company’s profits is likely to slow down, especially among large technology stocks, and many companies that were cherished by investors during the pandemic, such as Peloton and Netflix, have fallen as a return to normal means they lose momentum with new customers.
However, some investors are worried that even the largest technology companies may falter, which will worsen if interest rates rise – forcing them to dedicate more of their profits to debt payments, and also make it harder to achieve investors’ high expectations for growth. .
Technology stocks, which have been ahead of the market decline this year, were also beaten on Monday: The technology-heavy Nasdaq composite plunged around 5 percent, before rising back to end the day with a rise of around 0.6 percent. Nasdaq had already passed the correction threshold last week and is now down 13.7 percent from the highest.
Microsoft, the next of the major technology companies to report profits, is expected to say on Tuesday that the bottom line rose 12 percent in the last three months last year compared to a year ago, a significant decline from the previous quarter, which was the most profitable ever.
More generally, earnings from technology companies are expected to have risen almost 15 per cent in the fourth quarter. That is down from a year-on-year growth of almost 28 percent, according to the market research firm FactSet.
“The return to normalization that we will see this year will include more moderate growth and higher interest rates,” said Ryan Jacob, portfolio manager of the Jacob Internet Fund. “It’s a difficult environment for big business technology.”
Jeanna Smialek, Jeff Sommer and Stephen Gandel contributed with reporting.
