S&P 500 losing streak, Big Tech, earnings: Top Takeaways

April has been a funky month for the major market indices (^DJI, ^IXIC, ^GSPC). Entering into 2024's second quarter, the S&P 500 has had a hard time acclimating as it extends its losing streak to its sixth consecutive day of losses. The S&P 500 closed below 5,000 at Friday's close.

Yahoo Finance Markets Reporter Josh Schafer highlights what investors should gleam from the market as Big Tech stocks appear weighed down heading into their earnings season.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Luke Carberry Mogan.

Video Transcript

MADISON MILLS: NVIDIA and semiconductors dragging down the overall tech sector with the NASDAQ closing lower for a sixth day in a row. Joining us now with the takeaways from the trading day is Josh Schafer. And Josh, you were right, by the way. October was the last day.

JOSH SCHAFER: October was the last time we had six straight days down in the S&P 500.

MADISON MILLS: That's right.

JOSH SCHAFER: October 2022.

MADISON MILLS: Yes.

JOSH SCHAFER: OK.

MADISON MILLS: Yes.

JOSH SCHAFER: Quite a long time.

MADISON MILLS: Yeah, I know. It's been a while.

JOSH SCHAFER: Year and a half.

MADISON MILLS: I know. It's tough.

JOSH SCHAFER: I think to start talking about today specifically, I want to zoom in on the NASDAQ 100. Julie was were just talking about this a little bit. I'm looking at the Y-Fi interactive right now. And it's really just a sea of red across a lot of the major tech companies that we talk about quite a lot on this here.

You see NVIDIA down 10%. Amazon down more than 2.5%. Meta down 4%.

ASML down another 3% today. AMD down 5%. Netflix down 9%.

It just felt like it was sort of everywhere all at once for tech. And I wonder sort of maybe just if we're starting to see sentiment unwind a little bit. We've talked a lot on this show specifically in this takeaway segment, sort of talking about where the market's at, wondering when we're going to get a catalyst to sell off. You know, what is going to finally take us lower?

And I think thinking back on this week, we really had several catalysts, right, when we think about sort of the Fed repricing story. Well, if that was part of our positive narrative, that's been taken off the table a little bit. Are we even going to get cuts this year is starting to come up as a debate. So that's maybe off the table a little bit.

Earnings aren't impressing as much as people hoped, specifically from a guidance perspective. We saw that last night with Netflix, right? So Netflix stock falls. And then, it just feels like what's left here. And I think we probably need to hear from the tech companies maybe next week to maybe get a little bit more assurance for sort of the path forward here.

MADISON MILLS: And it puts a lot of pressure on them, to your point, and especially when we are in an environment where a lot of these tech names are sort of priced to perfection as we would say, though. Today's sell-off may be changing that dynamic a little bit. But I am very curious as to what is driving this sell-off more.

Is it some of the Fed speak we got today, with Goolsbee saying he's not not thinking about another hike? Or is it just some profit taking as we see the tech sector selling off? Is there anything that's coming up for you?

JOSH SCHAFER: To me, it all adds together, right? When you have different pillars that maybe serve as lines of defense, so to speak, right, and they all start to fall at the same time, I think it just kind of adds up all into one. We haven't even mentioned bond yields yet. And I think that's a large part of this story too, specifically on Tuesday.

We saw the two-year hit 5% for the first time since October. October was our market low, right Julian? Emanuel was on yesterday talking about that correlation between the two-year hitting 5% and stocks heading lower. It was pretty much exactly in correlation last year and perhaps not a coincidence that we're seeing that again happen right now.

JULIE HYMAN: But the bond yield move was not today, right? Like, you didn't see that big of a move in yields today.

MADISON MILLS: Right.

JULIE HYMAN: And so, you know-- listen. Sometimes things just happen in the market.

MADISON MILLS: Yeah.

JULIE HYMAN: Right? Sometimes things just happen. It's not because--

MADISON MILLS: It's true.

JULIE HYMAN: No. It's not because, like, all of a sudden, people think NVIDIA is not going to do well, right, or all of a sudden, rates get to a certain point and the actual fundamental case for things changes necessarily. Sometimes sentiment just shifts, and, you know, is it going to be a long-term shift? You won't know until you get to the long term, I guess.

JOSH SCHAFER: And I think part of it too, Julie, is, like, we haven't talked that much in the last three minutes here about how much most of these stocks have run up.

JULIE HYMAN: Of course.

JOSH SCHAFER: And sort of how that plays into just the general dynamics of a stock like NVIDIA falling 10% in the amount of computers out there, and different things that have in certain stop loss measures because the stock has gone up a certain-- there's a reason the stock gaps down 10% and doesn't just fall 3%, right? And I think there's a reason you see that in related stocks as well. And that's sort of, I think, what leads to some of these Friday sell-offs that we have where you sort of zoom out and it's, like, wow. That felt like a lot in one day. But it's because it all unwinds rather quickly when it comes--

JULIE HYMAN: We also haven't heard numbers from most of these companies yet. Yes, you got Netflix. But Netflix is just pretty much about Netflix at this point. It's not about bigger tech. And we'll get bigger tech next week.

JOSH SCHAFER: Yeah, you have Meta next week. You have Alphabet next week. And you have Microsoft next week, right?

You combine those three companies, NVIDIA and Amazon. And FactSet was out with a note earlier this afternoon. They're expected to grow earnings more than 60% this quarter compared to the other 495.

We're going 495 now. Not 493. The other 495 are expected to have earnings dropped 6%. So really, a large portion of your earnings growth for the S&P 500 is expected to just come from five companies. We hear from three of them next week.

What do those companies say? And those companies have had the ability to sort of-- if we're talking about maybe sentiment here and a little bit of vibes, those companies have had the ability in the past on their earnings call to give investors a little bit more confidence when talking about the future, and talking about the big AI theme, and that sort of thing. It'll be interesting for me, I think, just to hear what the commentary is and sort of how that maybe translates into any sort of sentiment read. I don't know-- I don't know if Zuck can do it for us by himself.

JULIE HYMAN: You know, I think now that NVIDIA has gained so much in prominence, we really need to speak to them about moving up their earnings date because they don't report until May 22. We got to wait.

MADISON MILLS: Brutal.

JULIE HYMAN: It's going to be tough--

JOSH SCHAFER: We got nothing to do for a month. We'll just hang out.

JULIE HYMAN: Well, we can listen to Zuck, I guess. We'll take it. Thanks, Josh.