This is troubling because most small US businesses depend more on the US economy (and US consumers) for their income and profits than the Dow and S&P 500 giants. They don’t generate as much revenue and profit. in markets around the world.
“Peel the onion in one layer and there has been a more severe inventory turnover below the surface,” said Liz Ann Sonders, chief investment strategist at Charles Schwab.
Sonders noted that many of the smaller companies in the S&P 500 beyond the best tech have been subject to big fixes over the past year. It’s just that there are enough “pockets of strength” among the large companies in the index to mask the broader weakness in the overall market.
This discrepancy has caught the attention of other Wall Street strategists as well.
David Wright, co-founder of Sierra Mutual Funds, noted in a recent report that many more stocks on the NYSE and Nasdaq have hit new 52-week lows rather than highs in recent times.
“What this means is that only a few large stocks are holding the indexes together, while a growing number of stocks are already in a bear market,” Wright said.
Memes Mania Return?
GameStop shares have risen over 850% so far in 2021. But the title has seen an extremely bumpy course, to say the least. GameStop is also trading at almost 65% below the record level it reached in January.
The company is still expected to record a loss for the current quarter. But Wall Street is forecasting a profit during the holiday period that ends in January and expects GameStop to make money in its next fiscal year.
Following
Monday: factory production in Germany
Friday: US consumer prices; Consumer sentiment at the University of Michigan
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