{"id":89754,"date":"2024-02-12T20:57:40","date_gmt":"2024-02-13T01:57:40","guid":{"rendered":"https:\/\/ifintechworld.com\/?p=89754"},"modified":"2024-02-12T20:57:43","modified_gmt":"2024-02-13T01:57:43","slug":"these-two-threats-could-topple-big-tech-and-erase-u-s-stocks-2024-gains","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=89754","title":{"rendered":"These two threats could topple Big Tech and erase U.S. stocks\u2019 2024 gains"},"content":{"rendered":"
\n

It\u2019s a question that has been on the minds of many market strategists: What could cause this top-heavy stock market to topple over? <\/p>\n

One longtime equity-derivatives strategist has some thoughts. In his latest note to clients, Nomura\u2019s Charlie McElligott discussed two things that could trigger a selloff in the megacap technology stocks that have driven most of the year-to-date advance in the S&P 500. <\/p>\n

\n

The most immediate concern for the market-leading tech names would be a potential Nvidia earnings miss, he said. The company is set to report quarterly results on \u00a0Feb. 21, according to FactSet.<\/p>\n

Analysts polled by FactSet expect the chip maker and artificial-intelligence darling to post earnings per share of $4.53 for the final three months of 2023. That\u2019s compared with 88 cents per share from the same quarter a year earlier. <\/p>\n

Nvidia shares
\n NVDA,
\n +0.16%<\/bg-quote>
\n have gained 35% since the beginning of 2024, establishing the chip maker as the best-performing stock on the S&P 500, FactSet data show. The second-best performer on the index is Meta Platforms Inc.
\n META,
\n +0.17%<\/bg-quote>,<\/span>
\n another member of the \u201cMagnificent Seven\u201d group of megacap tech stocks that has driven the bulk of the S&P 500\u2019s advance of 3.7% so far this year, according to FactSet data. <\/p>\n

Beyond that, the bigger threat to stocks in 2024 could arrive in the coming months, with economic data showing signs of reflation. According to McElligott, practically the entire investing community has left the prospect of a rebound in inflation for dead. <\/p>\n

But as many investors learned last year when ubiquitous recession forecasts failed to materialize, just because few on Wall Street expect something to happen doesn\u2019t mean it won\u2019t. <\/p>\n

Instead, McElligott thinks policymakers at the Federal Reserve could allow the U.S. economy to \u201crun hot,\u201d leading to a revival in \u201canimal spirits\u201d and, with them, inflation. <\/p>\n

While McElligott doesn\u2019t see much chance of this happening in the immediate future, he thinks it could occur during the coming months, once the favorable year-over-year comparisons for goods prices have faded \u2014 leaving economists and investors to contend with stickier services inflation. <\/p>\n

Such a revival would likely kick off a \u201cbrutal equities thematic reversal,\u201d causing crowded bets on the largest growth stocks to unwind as expectations for higher interest rates and Treasury yields cause a sharp contraction in valuation multiples. <\/p>\n

McElligott noted that consumer-price inflation has fallen to 1.9%, according to the last six months\u2019 annualized readings from the core personal-consumption expenditures price index. The PCE index is the Fed\u2019s preferred inflation gauge, and the central bank\u2019s official target calls for inflation to return to 2% on a year-over-year basis.<\/p>\n

But there\u2019s still plenty of room for things to \u201cget weird\u201d later, McElligott pointed out. <\/p>\n

Nvidia shares were weighing on the S&P 500 and Nasdaq Composite Tuesday, as the chip maker saw its shares slide 3.5% \u2014 leaving the company\u2019s shares on track for their largest drop since October, Dow Jones Market Data show. However, weakness in the chip maker\u2019s stock was being offset by strong gains in materials, real-estate and healthcare stocks, FactSet data show. <\/p>\n

The S&P 500
\n SPX
\n was flat as a result, while the Nasdaq Composite
\n COMP
\n was down 0.3% at 15,556 points, and the Dow Jones Industrial Average
\n DJIA
\n was up 60 points, or 0.2%, at 38,445.<\/p>\n

According to strategists at LPL Financial, just four stocks \u2014 Nvidia, Meta, Microsoft Corp.
\n MSFT,
\n -1.26%<\/bg-quote>
\n and Amazon.com Inc.
\n AMZN,
\n -1.21%<\/bg-quote>
\n \u2014 have driven nearly 75% of the S&P 500\u2019s total return in 2024. <\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s a question that has been on the minds of many market strategists: What could cause this top-heavy stock market to topple over? One longtime equity-derivatives strategist has some thoughts. In his latest note to clients, Nomura\u2019s Charlie McElligott discussed two things that could trigger a selloff in the megacap technology stocks that have driven […]<\/p>\n","protected":false},"author":1,"featured_media":89755,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-89754","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nThese two threats could topple Big Tech and erase U.S. stocks\u2019 2024 gains | iFintechWorld<\/title>\n<meta name=\"description\" content=\"It\u2019s a question that has been on the minds of many market strategists: What could cause this top-heavy stock market to topple over? 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