The report that Apple plans to slow plans for hiring and spending next year was enough to drag down the entire market.
Shares of the world’s largest technology company have slumped 17% this year, weighed down by a broad selloff in tech, driven by rising interest rates and inflation that promises to force consumers to cut back on spending.
The vote of confidence from Warren Buffett, who touted Apple as a good bet in an inflationary environment because of the ease at which it can raise prices, hasn’t seemed to give the company much of a boost. And while the stock hasn’t performed well, the business seems to be all right, with some analysts predicting that June quarter earnings will exceed expectations.
It’s almost as if investors are still looking for reasons to sell tech stocks. IBM,
Despite beating second-quarter estimates, was poised to fall on Tuesday. Netflix,
which reports after the bell, has already dropped more than 70% this year, despite analysts arguing that subscriber growth will recover in the longer term.
To be fair, Apple is still outperforming the Nasdaq,
which has declined almost 30% this year. But if the best of the bunch of higher-risk tech stocks now sees some headwinds ahead, maybe everyone needs to batten down the hatches.
*** Join Barron’s associate editor for technology Eric J. Savitz today at noon for a pre-earnings look at internet stocks with Ryan Jacob, CEO of the Jacob Internet Fund. Sign up here.
Apple, IBM Highlighted as Big Tech Earnings Kick Off
Apple is slowing hiring and spending growth in 2023 in an effort to be cautious in uncertain times, Bloomberg reported, news enough to send stocks tumbling into the red on Monday. But IBM earnings after the closing bell added a more hopeful outlook for tech earnings this week.
What’s Next: Netflix reports after the closing bell tonight. As usual, subscriber numbers will be the focus, especially after the streaming giant surprised investors by losing 200,000 net subscribers in the first quarter. Expect to hear more about an ad-supported subscription offering in the works.
,Liz Moyer and Eric J. Savitz
Boeing Gets Big Order From Delta Amid Travel Surge
Delta Air Lines ordered 100 new 737 Max 10 planes from Boeing,
with options to buy 30 more later, though the plane hasn’t been approved by aviation regulators yet. Boeing now has orders for about 740 of the Max 10s, as this year’s Farnborough Airshow just outside London continues.
What’s Next: Airlines that downsized during the pandemic are now waiting for pilots and flight attendants to complete their training and background checks. US airlines have hired more pilots this year than in any other full year, according to FAPA.aero, a pilot-career advisory company, the Journal reported.
,Al Root and Janet H. Cho
Berkshire Tops Up Stake in Occidental to Near 20%
Berkshire Hathaway continues to add its stake in Occidental Petroleum,
and now holds 19.4% of the energy company after new purchases totaling more than $100 million this past Thursday and Friday, according to a filing late Monday.
What’s Next: Berkshire seems headed toward a 20% stake in Occidental that would allow it to include a proportionate share of the energy company’s earnings in its financial results rather than just dividends received. That could boost Berkshire’s earnings by about $2 billion annually.
,Andrew Bary and Brian Swint
Home Builders’ Confidence Index Tumbles on Falling Demand
The National Association of Home Builders’ monthly confidence index tumbled 12 points in July, the second-largest decline in the index’s history and much lower than economists’ forecasts. The index, now 55, was 80 a year ago, MarketWatch reported.
What’s Next: NAR chief economist Lawrence Yun expects foreign investment in US real estate to increase because supplies of available homes are rising. Nonresidents are more likely to buy US homes as rental properties or vacation homes and to pay in cash.
,Janet H. Cho
Omicron Subvariant Dominates as US Cases Climb 18%
The highly contagious BA. 5 subvariant of Omicron remains the cause of the majority of Covid-19 infections in the US, where average daily cases are up 18.2% over the past two weeks, and hospitalizations and deaths are also increasing, The Wall Street Journal’s analysis found.
What’s Next: Dr. Anthony Fauci, 81, director of the National Institute of Allergy and Infectious Diseases and chief medical advisor to President Joe Biden, said he plans to retire by the end of Biden’s first term, calling it “extremely unlikely” he would stay after January 2025.
,Janet H. Cho
Be sure to join this month’s Barron’s Daily virtual stock exchange challenge and show us your stuff.
Each month, we’ll start a new challenge and invite newsletter readers—you!—to build a portfolio using virtual money and compete against the Barron’s and MarketWatch community.
Everyone will start with the same amount and can trade as often or as little as they choose. We’ll track the leaders and, at the end of the challenge, the winner whose portfolio has the most value will be announced in The Barron’s Daily newsletter.
Are you ready to compete? Join the challenge and pick your stocks here.
—Newsletter edited by Liz Moyer, Camilla Imperiali, Steve Goldstein, Rupert Steiner
Credit: www.marketwatch.com /