How Apple & Google Transformed into a Systemic Risk to the US Stock Market
Silicon Valley behemoths like Apple and Google have become a systemic risk to the US stock market. | Source: AP Photo / dapd, Martin Oeser
According to Credit Suisse strategists, the “reversal of fortunes” seen by tech behemoths Apple and Google-parent Alphabet are dragging down the performance of the overall US stock market. The S&P 500 forecast has been “skewed” by companies suddenly transitioning from high growth forecasts to much more modest outlooks.
This Bad Apple Could Roil the S&P 500
An “unusually high” number of big US companies have revised previously-bullish earnings forecasts downwards. These include Alphabet and Apple, as well as Exxon Mobile, GM, Micron, Chevron, and ConocoPhillips. Oil and technology companies are also pushing US stock market growth downward.
The S&P 500, according to Refinitiv, will now only grow by 0.3% in the first quarter of 2019 compared to 23% in all four quarters of 2018. Overall S&P 500 growth for 2019 is now expected to be 4.5%.
Apple, Alphabet, and Others See a Reversal of Fortune in 2019 Impacting the US Stock Market | Source: Credit Suisse
There have only been three other times since 1990 that so many companies have seen such a reversal of growth. Per the chart above, 71 quarters have seen two or fewer top 20 growth contributors move to the worst-performing segment. Thirty-five quarters have seen less than a handful of companies reverse so rapidly, and just three have seen more than seven do so, including the first quarter of 2019.
Cited in CNBC, Patrick Palfrey, a US equities strategist at Credit Suisse,