U.S. equities are trading choppily on Friday as the bulls battle for the 18,000 level on the Dow Jones Industrial Average. This after stocks succumbed to selling pressure on Thursday resulting in the worst selloff in two weeks.
Disappointing earnings have brought the sellers out in force. Remember, overall S&P 500 earnings are set for their worst performance in the first quarter since 2009 — marking the fourth consecutive quarter of falling profitability.
The selling pressure seems to be centered on one-time momentum favorites in the tech sector. That’s a problem for the market overall since these stocks tend to be heavily weighted in the major indices.
Here are six popular large-cap tech stocks at the center of this dynamic.
Big Tech Stocks at Risk: Apple Inc. (AAPL)
Apple (AAPL) shares have been on the slide all week and are now approaching their 50-day moving average for the first time since December.
Investors are worried the company is about to bungle the launch of the eagerly anticipated iPhone 7 later this year — with reports the iPhone 6 form factor will continue on with only incremental upgrades, such as a better camera, a second speaker that will take the place of the headphone jack and a bigger battery.
An iPhone 8 would then launch next year, returning to an all-glass aesthetic. I have recommended the May $107 AAPL puts to my Edge Pro subscribers.
Big Tech Stocks at Risk: Netflix, Inc. (NFLX)
Netflix (NFLX) shares got hit this week after reporting a revenue miss and disappointing on its forward subscriber growth guidance, especially in its international markets. Second quarter earnings per share guidance was also on the weak side.
Shares have taken out the 50-day moving average for the first time since the December/January selloff, putting a possible test of the February low in play and continuing the underperformance seen from the early December high.
Big Tech Stocks at Risk: Microsoft Corporation (MSFT)
Microsoft (MSFT) shares are down hard on Friday after reporting an earnings miss after the close on Thursday of 62 cents per share vs. the 63 cents analysts expected. Management also released cautious forward guidance.
Slowing consumer PC sales and a longer upgrade cycle continue to be a drag on results amid efforts to refocus into areas like cloud storage. The stock is headed for a test of the 200-day moving average, which was violated back in August but held in February.
Big Tech Stocks at Risk: Facebook Inc (FB)
Facebook (FB) has traded down to the bottom of its month-long consolidation range, testing support at its 50-day moving average.
Shares have been grinding sideways since November, but remain in an unbroken uptrend going back to 2013. There was weakness earlier in the month on negative chatter surrounding ad sales.
The company won’t report results until April 27 after the close, with analysts looking for earnings of 62 cents per share on revenues of $5.26 billion.
Big Tech Stocks at Risk: Alphabet Inc (GOOGL)
The company reported a top- and bottom-line miss on Thursday night, with earnings of $7.50 per share (vs. $7.90 expected) and revenues of $16.5 billion (vs. $16.6 billion expected).
Analysts at FBN Securities lowered their price target in response, highlighting weakness in gross advertising revenues.
Big Tech Stocks at Risk: Amazon.com, Inc. (AMZN)
Amazon (AMZN) shares are cooling their heels after an impressive ramp out of the February low that resulted in a 33%-plus gain. This after hitting resistance from the late January high.
Amid ongoing focus on the company’s ability to turn a profit amid rapid capital spending, watch for results on April 28 after the close.
Analysts are looking for earnings of 60 cents per share on revenues of just over $28 billion.