What have investors learned about the S&P 500, Big Tech, and Big Tech in the last four years? The CNN Business story on a tough year for the stock market

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This has been a tough year for the market. The S&P 500 is down nearly 20% and with two trading days left in the year, investors’ hopes of a miraculous recovery have been dashed.

The energy sector has returned over 600% this year and it beats every other S&P 500 sector. The only sector that has gained is 5%.

Gas and oil prices have been falling in recent weeks, but they’re still higher than they have been over the past few years. That’s contributed to record-breaking profits at major energy companies. The net income of global oil and gas producers is expected to double in 2022 to a record $4 trillion, according to the International Energy Agency.

Out of the S&P 500’s energy companies, 81% reported earnings above estimates, the highest of any sector. The energy sector reported the highest year-over-year earnings growth of all 11 sectors, at 137.3%.

Big tech had a nightmare year in 2022– collectively losing nearly $4 trillion in market value in 2022. That’s a lot when you consider the 10 worst-performing stocks in the S&P 500 have wiped out a market value of about $1.6 trillion.

GNRC is the worst performing stock of this year’s S&P 500, down about 74%. Coming in second is dating app company Match Group

            (MTCH), which is down 70%. The auto tech company was down about 70%, making it the third worst performer of the year. Meta, Facebook’s parent company, also makes an appearance in the bottom ten stocks– down 65%.

While Wall Street hopes for a tech rebound next year, investors might have to wait since there are more interest rate hikes on the way.

Stock Market Trading in Robinhood, Fla., After Bankman-Fried Gets Fleeing from a Heterogeneous Hedge Fund

Sam Bankman-Fried bought a nearly 7.6% stake in Robinhood

            (HOOD) earlier this year, financed with half a billion dollars borrowed from his hedge fund. The same one that prosecutors say was illegally funneling customer funds from its affiliated platform, FTX.

Four separate entities have laid claim to the approximately 56 million shares, worth about $450 million. FTX says SBF wants to hold onto those shares himself and use them as a payment for his legal expenses.

It is unclear if the $546 million used to purchase the stake included funds that were stolen from customer deposits in FTX.

The recent snowy weather has been bad for the business. The company laid off 23% of its staff in August after cutting 9% of its employees in April. The stock is down more than 50 percent for the year to date.

The Department of Transportation said it is looking into Southwest’s cancellations and delays. President Joe Biden said that they are working to make airlines accountable.

The company’s stock fell about 5% on Wednesday after a 6% drop on Tuesday – its largest tumble in five months. The airliner is currently down about 27% this year as investors fear the worst for the fate of the company that just can’t seem to get it together.

“Part of what we’re suffering from is a lack of tools,” Southwest CEO Bob Jordan told employees in a memo obtained by CNN. “We’ve talked an awful lot about modernizing the operation, and the need to do that.”

Southwest’s “point-to-point” model also didn’t help. The operational approach involves planes flying consecutive routes and picking up crews at the locations they are assigned to.

Jeff Windau, senior equity analyst of equity research for Edward Jones, explained that the canceled flights cause ripples through, because they don’t always have their crews and pilots in the right positions. It’s very difficult to get the operations flowing again when that gets disrupted, as they build on from city to city.

Source: https://www.cnn.com/2022/12/29/investing/premarket-stocks-trading/index.html

The Darlings of Southwest have Been Sensitive to Corporate Holidays: A New Report on the Rise and Fall of Market-Cap Titans

The Democratic senators from Massachusetts and Connecticut sent a new letter to Southwest on Tuesday urging them to pay for holiday cancellation.

The company can afford to do right by the consumers it has harmed, as evidenced by the $428 million Dividend Southwest is planning to issue next year. “Southwest should focus first on its customers stranded at airports and stuck on interminable hold.”

Other airlines, meanwhile, are doing their best to pick up the slack. The airlines will place price caps on travel to certain cities to help the customers get home and not have to break the bank.

Verbose writers afflicted with the tendency to deliver copy well above their requested word count are often advised by editors to kill their darlings – to throw out large swaths of stories that they’re particularly fond of.

But what’s been most surprising is that market-cap titans, traditionally expected to weather storms on Wall Street well, haven’t held up against the rising macroeconomic tides.

Stalwarts – the large, well-established companies that offer long-term growth potential, got crushed. The only thing you have to look at is Apple. Even the Oracle himself, Warren Buffett, thought it was a good idea to purchase more Apple shares in early 2022, but the stock is now down 29% for the year (Buffet’s Berkshire Hathaway

            (BRKA) is doing fine, though, up over 3% this year). Intel, another blue chip, has fallen 51%.

Tech companies have always been seen as the best way to make money. That has not been the case this year as Alphabet stock fell nearly 40% and Microsoft

            (MSFT) by 28%. Facebook parent company Meta, down 64% this year as it pursues virtual reality dreams, experienced the largest drop in market value over a single day of trading in February. The company has lost hundreds of billions of dollars.

Other recent darlings have been sent sputtering this year – Moderna

            (MRNA) was one of the top performing stocks of 2021 thanks in large part to its covid vaccine, and now it’s amongst the worst, down 24% this year.

Premarket stock trading in the 21st century: Where are we coming from? What can retailers, bank accounts, and supermarkets can tell us

Even Walmart

            (WMT), the big-box chain known for weathering many economic storms, is in the red this year, down just under 2%.

Surprising to the upside: There have been some companies that have been able to keep chugging along in 2022. Consumer staples posted their best relative performance to the S&P 500 since 2008 this year. Coca-Cola

            (KO) shares, up nearly 8%, trounced markets this year. Snack food company Mondelez

            (MDLZ) is also up 1.5%.

IBM is up 4% in a year where the tech sector is faltering. Bernstein Research analysts said in a note that the company is well above its historical range. But “given its defensive characteristics and historical performance, we believe that IBM

            (IBM) is likely to fare well if we continue to have pressured markets, and likely to lag major indices if we enter a recovery period,” they said.

Bank of America CEO Brian Moynihan stated last month that the continued strength of the US consumer was staving off the recession. The final two months of the year are important for retailers because they can account for 20% of total retail sales.

American bank accounts are still quite robust but are beginning to dwindle. In the third quarter of 2022, credit card balances jumped 15% year-over-year. That’s the largest annual jump since the New York Fed began keeping track of the data in 2004.

“Against this backdrop, we expect consumers will rein in their spending further in coming months,” said Gregory Daco and Lydia Boussour, economists at EY Parthenon. “Real consumer spending should see modest growth in the final quarter of the year, but we expect it will barely grow in 2023.”

And with interest rates poised to go higher in 2023 and economic uncertainty sure to grow, consumers could be starting to run dry at the worst time, reports my colleague Alicia Wallace.

Source: https://www.cnn.com/2022/12/30/investing/premarket-stocks-trading/index.html

Before the Bell: What Have You Done in 2022? – A Moment to Grace and Say Good bye to Your Majesty

2022 has been a wild ride, and I’m so grateful that you joined me for it. I hope that Before the Bell has helped you gain some semblance of balance in this often nonsensical good-is-bad and bad-is-good economy.

So as you count down to the New Year, please take a moment to congratulate yourself – you survived this year. No matter what state your portfolio is in, you deserve to take a breather and reflect on what you’ve dealt with.