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Since the beginning of 2023, the Nasdaq index is up by 15.60% in one of the major recoveries after last year’s downfall.
Last week, Nasdaq ended in the green snapping up its fifth consecutive of gains. This has been the longest winning rally for Nasdaq since it topped in November 2021. During last week’s trading, the tech-heavy index was 3.3%.
The last year of 2022, proved to be one of the worst years for the Nasdaq (INDEXNASDAQ: .IXIC) wherein the entire index tanked by 30%. Thus 2022, proved to be the worst year since the US financial crisis of 2008.
Since the beginning of 2023, the index is up by 15.60% and is currently around 12,000 levels. This five-week rally in Nasdaq, however, is quite different from its previous one in November 2021. Back then the market was over euphoric with IPOs having a gala time. Now, the macro environment has changed the dynamics and tech companies are being evaluated for their efficiency over innovation. The IPO market is almost dead and layoffs have shot up significantly.
Last week was the week for earnings reports across the tech sphere. Also, the results for some of the most valuable tech companies weren’t that good enough.
For the first time since 2016, Apple Inc (NASDAQ: AAPL) missed its earnings estimate, Google’s core advertising business shrank, Facebook parent Meta recorded its third straight quarter of revenue decline, while Amazon recorded 2022 as the weakest year of growth in its 25-year history. However, the stocks of these companies have managed to end up in the green during the last year.
Cost Control in Tough Macro Environment
Meta Platforms Inc (NASDAQ: FB) which faced a solid beating last year is seeing some recovery. Last week, the Meta stock jumped by 23% as the revenue came slightly above estimates and the first quarter forecast was in line with expectations.
In the earnings statement, Meta CEO Mark Zuckerberg said that this year will be the year of “efficiency”. Meta is likely to focus on more cost-cutting as it recently announced additional layoffs. Zuckerberg added: “we’re focused on becoming a stronger and more nimble organization”. Speaking to CNBC, Stephanie Link, chief investment strategist at Hightower Advisors, said:
“That was really the game-changer. The quarter itself was OK, but it was the cost-cutting that they finally got religion on, and that’s why I think Meta really took off”.
Last week, Apple stock surged by 6.2%. The stock price was corrected by 27% in 2022. Besides, Apple also reported the steepest drop in revenue over the last seven years. Apple CEO Tim Cook said that the company faced the heat of a strong dollar, the overall macro environment, as well as production issues in China affecting the iPhone 14 Pro and iPhone 14 Pro Max, Dan Flax, an analyst at Neuberger Berman said:
“Apple is navigating what is, of course, a very difficult environment quite well overall. As we move through the coming months and quarters, we’ll see a return to growth and the market will begin to discount that. We continue to like the name even in the face of these macro challenges.”
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