The top of the primary quarter is approaching, and fairness traders are in for a impolite awakening as they put together for earnings season, mentioned Dan Nathan, principal at RiskReversal Advisors. “It seems like we entered this year, and the stock market got off to this great start, because I think people had downshifted their recession expectations to a soft or no landing. And I think what’s happened with this kind of banking crisis here is it just kind of, you know, accelerated the potential for a weaker economy,” Nathan mentioned Monday on CNBC’s ” Fast Money .” “I actually think that the equity market has probably not gotten the memo yet,” he added. “I think it’s about to do that when we get into Q1 earnings season in a few weeks.” These feedback come because the S & P 500 closed practically 0.2% increased on Monday, posting its third straight constructive session as traders tried to maneuver previous the regional banking disaster that broke out this month. Within the first quarter of 2023, the S & P 500 is up greater than 3%. The Dow Jones Industrial Common is off by over 2% this quarter, whereas the tech-heavy Nasdaq Composite is buying and selling greater than 12% increased. .SPX YTD mountain S & P 500 YTD Nonetheless, the “Fast Money” merchants mentioned traders are failing to cost in tightening credit score circumstances, in addition to a weaker macro atmosphere, forward of first quarter earnings — significantly within the tech sector. Nathan mentioned consensus estimates for tech shares are elevated, at the same time as these corporations cope with the next rate of interest and inflationary atmosphere. “All of those things are going to be headwinds to earnings. So at some point, it’s my view that in the next few months or so, we’re gonna have some major tech companies likely guide down,” Nathan mentioned. “They’ve been cutting jobs , they’ve been cutting costs … sooner or later they’re going to actually have to say we’re taking the estimates down.” In the meantime, panelist Grasso International CEO Steve Grasso agreed a number of large-cap tech corporations have been “rewarded” just lately after asserting layoffs, as traders accredited of the cost-cutting measures. Equally, traders piled into mega-cap tech shares after the current banking disaster, citing their “stability,” Grasso mentioned. Nonetheless, he questioned whether or not that may proceed after earnings. “They have the balance sheets, they have the stability. So does that last, or is it a reversion off of that move?” Grasso mentioned. Dealer Karen Finerman was much less destructive on the sector, saying provide chain points and a pullback within the stronger greenback have eased this 12 months, weighing much less on mega-cap tech shares. “We talked about the market as a monolith, but it’s not,” mentioned Finerman, chief government officer at Metropolitan Capital Advisors. “There’s a lot of different, different flavors.”
