The market was chugging along quite nicely with leadership from big-cap technology names, including Alphabet (GOOGL) , Meta (META) , Apple (AAPL) , and Tesla (TSLA) , but it was a bit too frothy at mid-day. Without any obvious news, an intraday reversal took hold, and the indexes gave back a chunk of the day's gains. They recouped some of the losses, and it was still a very good day for the indexes, with breadth around 5,450 gainers to 2,700 decliners and 150 stocks hitting new 12-month highs. There wasn't a lot of wild momentum, but it was like the old days with the FATMAAN names providing the main leadership.
The focus will now turn to earnings. The first real test of earnings season will occur on Tuesday morning when Johnson & Johnson (JNJ) , 3M (MMM) , GE (GE) , and Verizon (VZ) report prior to the open. After the close, all eyes will be on Microsoft (MSFT) , which should provide some interesting insight into the big-cap technology names that have recently announced layoffs. We will have to wait until next week for the rest of the technology heavyweights to report.
After the run-up many stocks have enjoyed recently, expectations have increased, and conditions for a sell-the-news response are much higher. Stocks like Microsoft (MSFT) have jumped almost 10% from their lows just a few weeks ago and are not somewhat extended, and dealing with overhead resistance. That doesn't mean that they can't go higher, but it is going to be much harder for them to generate sustained momentum unless they produce exceptionally strong reports.
Market strategists like Mike Wilson of Morgan Stanley and Marko Kolanovic of JP Morgan have been insistent that the market has not priced in slowing growth or a recession. It is going to be very interesting to see forward guidance from corporate management. The market is much more optimistic than the well-known strategists.
Have a good evening. I'll see you tomorrow.
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