Stocks experienced their third consecutive week of declines, with the S&P 500 losing just under 1% and the Nasdaq Composite down 2%. The S&P lost 3% for the week, while the Nasdaq shed 5.5%, marking the biggest weekly decline in nearly two years. As earnings season heats up, investors are watching closely to see if this is a temporary pullback or the start of a cyclical rotation. Some of the strongest performing stocks, such as Super Micro Computer and Nvidia, saw significant declines, with Tesla down 40% for the year and Apple down 13%.
As stock prices fall, fundamental values are aligning more with historical averages. The 12-month forward-looking P/E for the S&P 500 is now at 19.9, down from 21 at the end of March. Economic data releases are expected this week, including Manufacturing and Services PMI, home sales data, first-quarter GDP figures, and the Personal Consumption Expenditures Index. The PCE report, closely monitored by the Federal Reserve for inflation, will be particularly noteworthy. Additionally, there has been a notable selloff in metals, with gold down almost 2.5% and silver off 4.5% after recent rallies.
Earnings reports from major companies are on the horizon, with Tesla, Alphabet, Meta Platforms, and Microsoft among those scheduled to report. Tesla, in particular, is under scrutiny as the company is down 40% for the year and facing challenges, such as a recent voluntary recall and price cuts on vehicles and software. Other stocks making news include Coinbase, which is up over 2%, and Salesforce, indicated higher by nearly 3% following failed acquisition talks with Informatica. Volatility is increasing in the market, leading to potentially larger moves for companies reporting earnings.
Investors may be faced with choppy trading as companies report earnings and economic data is released, with Tesla and Meta Platforms expected to see significant moves. Options traders may find opportunities for premium selling, while stock investors could consider opportunities to buy into companies with pullbacks in share prices. Sticking to long-term investing objectives and plans is crucial during times of market volatility. The content provided by tastytrade, Inc. is for educational purposes only and not intended as trading or investment advice. It is recommended to seek professional guidance before making any investment decisions.
