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Thursday, January 5, 2023
By today’s newsletter Jared Blickre, a reporter focused on the markets at Yahoo Finance. Follow him on Twitter @SPYJared. Read this and more market news on the go Yahoo Finance Software.
Two trading days into the new year and 2023 is already off to a rocky start for Apple ( AAPL ) and Tesla ( TSLA ), two of the most important stocks for US investors.
While both stocks managed to end Wednesday with gains, they remain submerged in the new year after hitting each new 52-week low on the first trading day of 2023.
Tesla’s 12% drop on Tuesday was its worst one-day performance since 2020. Apple’s start to the year saw the iPhone maker lose its status as the last US tech giant with a market value of over $2 trillion.
With so many new leaders emerging in the S&P 500, history suggests that these two stocks may not maintain their top status for investors in the coming years.
Some of the biggest companies by market capitalization have taken the biggest hit over the past three months, with Tesla leading the pack with a 55% loss.
During that time, Amazon ( AMZN ) is down about 30%, while Apple and Alphabet ( GOOG , GOOGL ) are down about 13%.
In contrast to the trailing quarter performance of some major names in the healthcare, financials and consumer staples sectors, we may see a changing of the guard in real time.
Pharmaceutical company Merck ( MRK ) is up more than 25% in the past three months, big bank JPMorgan Chase ( JPM ) is up 20%, and consumer goods Procter & Gamble ( PG ) is up more than 15%.
Historically, market leaders do not span multiple bull markets and decades.
At the height of the dot-com bubble in 2000, the top five stocks were Microsoft, Cisco ( CSCO ), General Electric ( GE ), Exxon Mobil ( XOM ), and Intel ( INTC ).
Those names accounted for 18% of the S&P 500’s market value at the time, according to Goldman Sachs research. Today they are only 8%.
Compare these names to the leaders in early 2022, which increasingly looks like the end of a decade-long low interest rate cycle.
These leaders were Apple, Microsoft, Alphabet (GOOGL, GOOG), Amazon (AMZN) and now Meta Platforms (META).
The group achieved an eye-watering 25% concentration in the S&P 500 around the start of the pandemic — a share that has now shrunk to 18% today.
Only Microsoft spans both periods, though it’s a bit misleading, as the stock fell out of the ranks of the market’s biggest names after the tech bubble burst, only to re-emerge under Satya Nadella in the late 2010s.
Exxon Mobil is another interesting case.
The company passed Apple’s crown as the largest public company in the United States in 2013. The stock was then decimated by two oil crashes, first in 2014 and then in 2020. However, as crude oil has risen over the past two years, so have energy stocks. Now Exxon is back in the top ten, sitting at number eight.
The remaining companies in the top five in 2000—Cisco, Intel, and GE—are still well below their record highs two decades ago. GE, meanwhile, is stuck 85% below its 2000 record; On Wednesday, its healthcare unit launched as a separate public company.
Of course, the future is not predetermined in any market environment, and investors will be looking to price in many game-changing unknowns this year.
Key to these unknowns will be the debate over whether the bear market has bottomed and when the Federal Reserve will finally turn.
Regardless, investors will be best served in the new year and new era, and should keep an open mind rather than focusing on yesterday’s broken leaders.
Even if these breakout leaders are home stocks like Apple and Tesla.
What to Watch Today
Economy
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7:30 a.m. ET: Challenger Job Qualificationy/y, December (416.5% on previous month)
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8:15 a.m. ET: ADP Employment ChangeDecember (150,000 expected, within 127,000
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previous month)
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8:30 a.m. ET: Trade balanceNovember (-63.1 billion dollars expected, -78.2 billion dollars in the previous month)
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8:30 a.m. ET: Initial Unemployment ClaimsWeek ending December 31 (225,000 expected, 225,000 in previous week)
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8:30 a.m. ET: Continuing ClaimsWeek ending December 24 (1.727 million during previous week)
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8:30 a.m. ET: S&P Global US Services PMIDecember Finals (44.4 expected, 44.4 last month)
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8:30 a.m. ET: S&P Global US Composite PMIDecember Final (44.6 in the previous month)
Earnings
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AngioDynamics (ANGO), Conagra (CAG), Constellation Brands (STZ), Helen of Troy (HELE), Walgreens Boots Alliance (WBA)
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