The market’s tech-led slump deepened on Thursday, with the S&P 500 and Nasdaq extending their declines for a third consecutive session. The S&P 500’s 1% dip placed it in negative territory for the year, while the Nasdaq fell 1.4%, further solidifying its year-to-date losses. Investors sought refuge in safer assets like bonds, as even cryptocurrencies like Bitcoin and precious metals like silver experienced significant downturns.
However, pockets of resilience emerged within the broader market downturn. For some, stocks tied to consumer spending and healthcare proved to be reliable performers. Bristol Myers Squibb emerged as a notable gainer, advancing nearly 3.5% after reporting strong earnings that exceeded expectations and prompted a raise in forward guidance. Procter & Gamble also contributed positively to portfolios, closing the session up 1%.
The enterprise software sector, however, continued to face headwinds. Salesforce shares shed another 4.5%, reflecting ongoing concerns that advancements in artificial intelligence could enable companies to develop in-house solutions, thereby reducing reliance on established enterprise software providers. This sentiment was exacerbated by the launch of Anthropic’s latest AI model, which demonstrates strong coding capabilities, potentially disrupting the established order in software development.
Alphabet’s stock, despite trading down more than 1.5% in afternoon trading, had recovered significantly from its earlier lows. The company’s recent earnings report showcased robust cloud growth, underscoring the impact of its substantial investments in artificial intelligence. This performance suggests that the earlier punishment of Alphabet’s shares may have been disproportionate to its fundamental strength and strategic direction.
In the aerospace sector, Boeing shares experienced a notable rise in a challenging market. Reports indicated that Boeing and its rival Airbus are in discussions with Saudi Arabia’s national carrier for a potentially record-breaking aircraft order, involving at least 150 widebody and narrowbody jets. While Saudia has not finalized its decision on specific models or quantities, the prospect of such a significant deal buoyed investor confidence. This positive development was further supported by a bullish call from Citi analysts, who placed Boeing on a 30-day “catalyst watch” and reiterated their buy rating, citing a dramatic improvement in delivery rates that have helped the company meet first-quarter estimates. Adding to the optimism, Jefferies analysts suggested that Boeing could secure its first new orders from China since 2017, a development potentially influenced by recent diplomatic engagements. Jim Cramer has consistently expressed a bullish outlook on Boeing, and the stock has already seen a year-to-date gain of over 10.5%.
Costco continued its strong performance, with shares advancing over 1% on Thursday, contributing to a 15% gain year-to-date. This follows a robust January sales report, where comparable sales, excluding fuel and currency fluctuations, rose 6.4%, surpassing the consensus estimate of 5.1%. Growth in non-food items reaccelerated, alongside food and sundries, and fresh foods. Positive factors contributing to this performance included favorable weather conditions from winter storms and a recent uptick in gold prices, which benefits Costco’s gold bar sales. The strong January results, building on a solid December, have signaled a resurgence in momentum and boosted market confidence in a company that was perceived as lagging just a few months prior.
Looking ahead, market participants are keenly awaiting earnings reports from Amazon and Fortinet. Amazon’s results are particularly anticipated, given the company’s focus on making AI more cost-effective, a strategy that could significantly influence its stock performance. Fortinet’s earnings could also provide valuable insights into the cybersecurity sector, potentially serving as a read-through for companies like Palo Alto Networks and CrowdStrike, which have been caught in the broader enterprise software sell-off despite the critical nature of cybersecurity for businesses in the current landscape.
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