On Monday we presented readers with the latest observations from BofA quants who pointed out that Q3 earnings “smacked of the tech bubble” because despite impressive beats, in many cases stocks dropped (or outright tumbled) in kneejerk response as virtually everything has now been priced to (and beyond) perfection with little chance of upside surprise. Nowhere was this more evident than on Thursday afternoon when the world’s 4 biggest tech companies all reported blockbuster earnings and yet all sank subsequently with the exception of Alphabet which popped after hours (while Twitter cratered as countless conservatives bailed on the ultra-liberal and openly pro-Biden social network).
Nasdaq futures fell about 1%, erasing more than half of what was a 2.7% slide earlier after Apple’s iPhone sales and Twitter’s user growth both missed estimates. The two stocks sank in pre-market trading. Amazon.com fell 1.4% after it forecast a jump in costs related to COVID-19, while Facebook shed 2% as it warned of a tougher 2021. Google parent Alphabet was the only bright star among the FAAMGs with its shares jumping 7% after it beat estimates for quarterly sales as businesses resumed advertising.
Ahead of the overnight tech rout, global stock were already on course for the worst weekly decline since March as lockdown measures and the collapse of stimulus talks (which “nobody” could have predicted) crippled trader optimism. Treasuries, the dollar, oil and gold were little changed.