In this Stockhead series, Josh Gilbert – market analyst at global investment platform eToro – gives investors the scoop on all things Nasdaq related; the key market themes, along with popular investment trends based on eToro’s data and insights.


US stocks are caught in a toxic vice of rising Fed rate hike expectations and recession risk fears, which is driving valuations lower, particularly hitting high flying and most expensive segments, like tech.

The Nasdaq continues to suffer as tech stocks plunge, with the index down more than 24 per cent so far this year, even after a near 4 per cent gain on Friday.

Last week’s US inflation report was a key inflection point that offered some relief to markets despite a print that was still pretty hot. The year-over-year rate peaked and fell to 8.3%, and month-over-month decelerated sharply. The road to the Fed’s 2% inflation target won’t be easy with many prices ‘sticky’, and labour and housing markets tight.

But we see room for some gradual relief, with this likely to be the peak inflation reading and, therefore, the Federal Reserve’s tightening expectations close to full-priced in. However, if inflation stays this hot, it could mean the door is open for a more hawkish stance from the Fed.


US earnings a general beat

Investors can take some positives from last week, with earnings from US corporates remaining resilient. Despite some high profile misses, the overwhelming message is that we have seen a strong US earnings season in light of all the bad news.

The US is reporting around 11 per cent earnings growth, with 76 per cent of companies beating earnings expectations. Earnings remain a key market anchor and partially offset the continued valuation pressures.

Despite many companies beating expectations, Peloton couldn’t quite continue that trend last week. The connected fitness equipment maker reported a wider than expected loss, a sharp decline in sales and guidance that disappointed, citing a significant drop in demand. It’s been a tough year for Peloton, but investors won’t be writing them off just yet, given they have one of the largest fitness subscription bases in the industry at close to 3 million.


I, Apple

With tech coming under pressure, Apple was one of the most resilient during this time, but it fell victim to that pressure last week. Apple’s shares fell 3.2 per cent last week and lost its status as the world’s most valuable company, with Saudi Aramco claiming the crown. With energy prices soaring this year, Saudi Aramco shares have climbed 30 per cent year to date, but Apple’s shares have tumbled 17 per cent.

Elon Musk might just be one of the most talked-about men in the world, and here we are talking about him again. The Tesla CEO took to Twitter – where better – to say that the deal for him to acquire Twitter was ‘temporarily on hold’ pending confirmation that spam or bot accounts represented less than 5 per cent of users.

If Musk walks away from the deal, he could be on the hook for a USD$1 billion break up fee, though this cost is likely no worry for him, given his 16% stake in Tesla – valued at around $120 billion – will ease any pain. Tesla shares rose more than 5 per cent on Friday on the back of the news. If the deal doesn’t complete, we will likely see a further relief rally from the Tesla share price.


This article was developed in collaboration with eToro, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.