Big Tech continues its winning streak, but it wasn't enough to ignite a broader rally in markets.
On Wednesday, Microsoft rallied 7.24% on the back of a strong earnings report that was boosted by a jump in revenue from its Intelligent Cloud business segment. The tech company's stock hit a 52-week high, putting it within a hair's breadth of $300 per share. Amazon climbed 2.35% as investors hoped the e-commerce giant, which is the market leader in cloud services, would post strong numbers Thursday too.
Still, the tech-heavy Nasdaq Composite finished the day only 0.47% higher. (Meta, which also had an excellent first quarter, posted earnings after markets closed.)
Why didn't the Nasdaq rise more from Big Tech's better-than-expected first-quarter results? Probably because tech stocks were already doing so well.
"There was such a rally into their earnings season that I think you needed earnings to really clear a high bar to actually catalyze another leg higher," said Ross Mayfield, investment strategy analyst at Baird. "That just hasn't been the case, especially when you have other headwinds pressing down on the market."
Indeed, fears around First Republic induced losses in other major indexes. The Dow Jones Industrial Average lost 0.68% and the S&P slipped 0.38%.
Banks might not be as exciting as technology companies. But banks are so fundamental to the health of the economy that any sign of weakness in one is enough to send waves of fear throughout investors and make them forget, if only temporarily, the promises of Big Tech. What use is there, after all, in building a skyscraper if the foundation is shaky?
