Despite the Nasdaq Composite Index and the S&P 500 closing at record highs on Thursday, the S&P, Dow and Nasdaq futures turned lower on the three major stock indexes as large technology stocks reported after-hours third-quarter reports that fell short of expectations.
Amazon (Amazon) shares fell in late trading after the e-commerce giant's results missed market expectations for the third quarter, and the company expects expenses to increase in the fourth quarter due to supply chain disruptions and higher labor, materials and shipping costs. The company said in its earnings report that these factors are expected to bring "billions of dollars in additional costs" to Amazon in the quarter.
Meanwhile, technology giant Apple (Apple) also disappointed Wall Street, even after the launch of the latest iPhone 13 phone series, its phone sales are still lower than expected. Shares of Apple suppliers, including TSMC, Qualcomm and Broadcom, also fell after the report was released.
For Wall Street, the results appear to confirm previous fears by many that growing supply chain disruptions, labor and material shortages are affecting companies of all sizes and presenting challenges for companies in keeping up with growing demand.
For Apple, Amazon and a number of other technology companies, investors are also concerned that these lucrative "home concept stocks" last year in the post-epidemic (Covid-19) period can not maintain high growth rates. Amazon's third-quarter sales rose 15 percent, significantly lower than the 27 percent in the second quarter.
I agree that they are overvalued," said Rebecca Felton, senior market strategist at Riverfront Investment Group. But remember, valuation is a condition, not a driver of price. I think the catalyst for technology will be the consistency of its long-term and short-term earnings growth."
However, also ultra-high weighted technology stocks, Google (Google) and Microsoft (Microsoft) both saw their shares hit new highs earlier this week after reporting better than market expectations.
Michael Vogelzahn, chief investment officer at Captrust, said: "Fiscal stimulus and monetary stimulus have been driving the market higher since it rebounded from the lows of the epidemic era. What we are seeing now is that these efforts have been completed. We expect the Federal Reserve (Fed) to begin tapering asset purchases (QE) soon. We do not expect interest rates to rise significantly from now on. But this means that the market's valuation is unreasonable. By anyone's estimation, it is not cheap. In order to make progress, we will have to see stronger earnings growth, and continued strong earnings growth."
He added, "We've seen the cycle peak. These are tough times -- is it possible for all companies to grow profitably? Can the global markets and economy solve some of the logistical problems?"
