Before the Bell: Will Megacaps Continue to Boost the Market?

Premarket action on Monday had the three major U.S. indexes trading slightly lower. The Dow Jones industrials were down 0.13%, the S&P 500 down 0.1%, and the Nasdaq 0.04% lower.

All 11 market sectors closed higher again on Friday. Technology (2.14%) and consumer cyclicals (2.12%) rose the most. Consumer staples (0.08%) and industrials (1.06%) posted the day’s smallest gains. The Dow closed up 1.17%, the S&P 500 up 1.61% and the Nasdaq up 1.97%.

Two-year Treasuries closed down three basis points at 4.86% on Friday, and 10-year notes fell by 11 basis points to close at 3.97%. In Monday’s premarket, two-year notes were trading at around 4.84% and 10-year notes at about 3.92%. Falling interest in government bonds provided some of the fuel that drove equity prices higher on Friday.

Economic data due out this week include the weekly report on initial claims for unemployment benefits, currently pegged to rise slightly week over week. The nonfarm payrolls report for February will be released Friday. Analysts are expecting a sharp drop, primarily in private payrolls. The unemployment rate is expected to remain unchanged at 3.4%.

Thursday’s trading volume was below the five-day average, and New York Stock Exchange winners outpaced losers by 2,484 to 588, while Nasdaq advancers led decliners by about 5 to 2.

Among the S&P 500 stocks, Friday’s big winner was contact lens maker Cooper Companies Inc. (NYSE: COO), which added 7.3% following a quarterly report that topped estimates on both the top and bottom lines.

Friday’s biggest loser was Hormel Foods Corp. (NYSE: HRL), dropping 2.87% after reporting results that missed estimates on both profit and revenue. The company also lowered guidance for 2023 earnings per share.

The market movers on Friday, however, were the megacaps. Meta Platforms Inc. (NASDAQ: META) added 6.14%, Tesla Inc. (NASDAQ: TSLA) added 3.61%, Apple Inc. (NASDAQ: AAPL) added 3.51%; Inc. (NASDAQ: AMZN) added 3.01%, Alphabet Inc. (NASDAQ: GOOGL) added 1.79% and Microsoft Corp. (NASDAQ: MSFT) added 1.66%.

Meta’s big jump likely was due to an announced cut of up to a third in the price of its Quest virtual reality headsets (now just $1,000) or another round of layoffs in the CEO Mark Zuckerberg’s promised drive for “efficiency” or the announced AI LLaMA supergroup or a combination of all three. LLaMA (Large Language Model Meta AI) was released a couple of weeks ago, another artificial intelligence model following on the buzz generated by OpenAI’s OpenGPT chatbot released into the wild last November.

Tesla did not even need another press conference to generate a solid gain Friday. Shipments of Chinese-built vehicles soared 32% year over year in February to 74,402 and increased by 13% month over month. Over the weekend, Tesla also cut prices for some versions of its Model S by $5,000 and some versions of the Model X by $10,000. That had a slight negative impact on the shares in Monday’s premarket. Still, investors (and buyers) had better get used to Tesla’s frequent pricing changes because it looks like they are here to stay.

Apple stock may have gotten some reflected glory from an announcement by its major iPhone supplier, Foxconn, of the Taiwan-based company’s plans to build a major assembly plant in India. Foxconn, officially Hon Hai Precision Industry Co. Ltd., is looking to distance itself from U.S.-China geopolitical tensions that are unlikely to improve anytime soon.

Amazon delayed construction of its HQ2 campus in northern Virginia last week and, over the weekend, announced the closure of eight of its cashierless stores in San Francisco (four stores), New York (two) and Seattle (two). The e-commerce behemoth is also reportedly closing, canceling, or delaying the construction of more than 32 million square feet of ground-level warehouse space at 99 facilities. Amazon disputed the report.

Alphabet is still recovering from its 12% share price drop following the rushed introduction of its Bard chatbot, and Microsoft is expecting good news from the European Union related to its acquisition of Activision Blizzard.

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