This is troubling because most smaller US firms depend more on the American economy (and US consumers) for their revenue and earnings than the giants of the Dow and S&P 500. They aren’t generating as much revenue and profit from markets around the world.
“Peel the onion back one layer and there has been a more severe rotation in stocks under the surface,” said Liz Ann Sonders, chief investment strategist at Charles Schwab.
Sonders noted that many of the smaller companies in the S&P 500 beyond the top techs have been prone to big corrections in the past year. It’s just that there are enough “pockets of strength” among the larger firms in the index to mask the broader weakness in the overall market.
This divergence has caught the attention of other strategists on Wall Street too.
David Wright, co-founder of Sierra Mutual Funds, noted in a recent report that far more stocks on the NYSE and Nasdaq have been hitting new 52-week lows rather than highs as of late.
“What this means is that only a few large stocks are holding the indexes up, while an increasing number of stocks are actually in a bear market already,” Wright said.
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Meme mania returns?
Shares of GameStop are up more than 850% so far in 2021. But the stock has had an extremely bumpy ride, to put it mildly. GameStop is also trading nearly 65% below the all-time high it hit in January.
The company is still expected to post a loss for the current quarter. But Wall Street is predicting a profit in the holiday period that ends in January and is forecasting that GameStop will make money in its next fiscal year. Maybe you interested edukasyon.
Monday: Germany factory production
Friday: US consumer prices; University of Michigan consumer sentiment