Technology stocks continued a sell-off on Friday as investors looked to earnings in the week ahead after a disappointing batch of results earlier this week.
The Nasdaq 100 shed 0.3%, deepening losses from Thursday when technology groups fell on the backs of lower-than-expected sales at Netflix and an adjusted earnings miss at Tesla.
The yield on the 10-year note fell one basis point, bringing weekly gains to less than a point. American Express fell 3.5% after missing revenue forecasts. The yen tumbled on speculation the Bank of Japan won’t make changes to its yield curve control program. Meanwhile, Alphabet and Exxon Mobil gained while Meta Platforms fell ahead of the groups’ earnings expected next week.
“Next week we may need to see strength across line items and guidance lifts to maintain index-level momentum,” Citi’s Scott T Chronert wrote in a note. “NFLX and TSLA both beat on the bottom line this week, yet fell 8.4% and 9.7%, respectively, day over day. This may be telling as to how high the bar really is to support current valuations.”
Investors had been braced for a volatile session on Friday as a flood of options expired before an out-of-cycle rebalancing in the Nasdaq 100. The index shuffle, which takes effect on Monday, is designed to reduce the dominance of megacaps and boost the presence of smaller members.
In equities, the main focus continues to be whether the rally in a handful of megacap stocks and hype over artificial intelligence has staying power. The S&P 500 has already surpassed most estimates for where it would end the year, confounding strategists convinced that 2023 would be another bad year for markets heading into recession.
“So where we are right now, we are resting after the massive move over the course of many weeks,” Ken Mahoney, CEO of Mahoney Asset Management, wrote in a note. “A lot of stocks were creating and still are creating bases to break out higher from. No one could believe their eyes after being so conditioned to 2022’s nasty selling conditions when this market gained steam again.”
In commodities, wheat futures fell as much as 3.6% as Ukraine made preparations to continue a grain-export deal, which Russia exited this week. Oil notched its fourth weekly gain amid tentative signs that global markets are tightening. And gold slipped against a stronger dollar on Friday, paring gains made earlier in the week.
