Observation: Stocks are making their numbers but lowering guidance.
These companies are warning you the economy is slowing down.
Stocks are priced for perfection which is why the reactions to bad guidance are so violent.
— QE Infinity (@StealthQE4) May 30, 2024
Stocks are meeting their current numbers but issuing lower guidance, signaling a slowdown in the economy. Companies are warning about this by revising forward estimates significantly, leading to violent market reactions. The stock market is priced for perfection, making it easy to hit reduced targets, but the broader implications are concerning.
Nvidia’s meteoric rise exemplifies the market’s volatility. Its market cap has surged to $2.8 trillion, just $100 billion shy of Apple’s $2.9 trillion. This year alone, Nvidia’s valuation has skyrocketed by $1.7 trillion. The “Mag 7” tech giants are shouldering most of the earnings per share (EPS) burden, but what happens when high expectations and elevated prices collide with reality?
This environment underscores the precariousness of the market. Investors should heed the warnings embedded in companies’ revised forecasts. While current numbers might look good, the forward-looking guidance paints a more sobering picture of the economic landscape.
Would you buy a company when it costs $59 for $1 of its earnings? Especially when peers are much cheaper?
— Global Markets Investor (@GlobalMktObserv) May 31, 2024
THIS IS INSANE:
Nvidia is just $100 billion away from becoming the 2nd largest stock in the world.
Nvidia's market cap has risen to a whopping $2.8 trillion and almost matches Apple's $2.9 trillion value.
Nvidia's capitalization has skyrocketed by $1.7 trillion year to date. pic.twitter.com/DDFE3b7GOf
— Global Markets Investor (@GlobalMktObserv) May 30, 2024
“The Mag 7 continues to carry the brunt of the EPS load.”@BlakeMillardCFA pic.twitter.com/Ls1Ejx6ZeV
— Daily Chartbook (@dailychartbook) May 31, 2024
What happens when high expectations and high prices meet reality. pic.twitter.com/PmypjPpQrZ
— Mac10 (@SuburbanDrone) May 30, 2024