This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics. A stiff test for the market's rebound, coming at an interesting spot. The S & P 500 rebounded a speedy 8% from the Jan. 24 correction low and rose right up to the lower end of an old congestion zone in the 4,600s. The V rebound was pretty symmetrical – the bounce recovered the steepest part of the accelerated sell-off into the lows. As noted yesterday, it was unlikely to stay on that angle back to the highs. Some slippage to retrace some of the bounce, digest and rotate around isn't in itself a serious negative. Another 2% of downside would look just like a consolidation on the chart. But an immediate return trip to the lows this soon might not be the bulls' favored outcome. So far this is an absorption of bad news and a rotation day. Small-caps and equal-weight S & P down about 1% with S & P 500 off 1.5%. The jolt of Meta 's radical guide-down of near-term growth has had a significant blast radius in ad-supported tech, though so far has not been used as an excuse for a broader liquidation across sectors. SNAP down almost as much as FB, a less-dominant player on the same field. Yet GOOGL is holding nearly all of yesterday's strong bounce, MSFT off smallish and "older media" hangs in fine. The FB result a combination of erosion of ad-targeting ability, squeezed marketing budgets and looser engagement due to TikTok and all other diversions. But the company's new reporting structure shows the core platforms' margins are even higher than believed, with enormous investment losses racked up for whatever comes next – call it metaverse or just the evolution of digital interaction. The stock is likely in "growth purgatory" for a while, though it has decent valuation support. Its $39 billion in remaining share-buyback ammo (FB repurchased $20 billion in the fourth quarter alone) is now almost 6% of its current market cap and that's significant. Was this a "lower the bar" quarter to clear the path for future outperformance while signaling regulators that FB is a nondominant competitor scrapping for what it can against upstart threats? Reminds me a bit of the infamous "Marlboro Friday" in 1993, when Altria predecessor Philip Morris stunned the Street by cutting prices on its flagship cigarette brand and the stock tanked by more than 20% in a day. As with Facebook, this was a company with an addictive product believed to have a tight hold on its customer loyalties, which jarred investors with a sudden business-model shift that made known competitive pressures seem immediately more urgent. MO ended up doing well from the post-collapse lows, but the recovery process took a while. Earnings season more broadly has grown a bit sloppier, with a dearth of raised guidance and companies across sectors warning of some margin erosion. Aggregate forecasts aren't dropping fast, but it's a patchier environment. Bank of England lifting rates as expected and ECB rhetoric more open to a 2022 rate hike has global yields on the hoof. It keeps the Fed from seeming out of step and has prompted a pullback in the dollar after a good run. Financial stocks are liking the move. Healthy jobless claims number this morning, probably further takes the suspense out of tomorrow's jobs number. Everyone already braced for a weak omicron-driven payroll print, but the weekly claims suggest things had firmed up by the end of January. Market breadth is poor but improved a bit from the open, about 1:3 up:down volume. VIX has a bid, but only up into the mid-23s, not undoing the sharp spike that marked the recent market lows.
A trader works on the floor of the New York Stock Exchange.
This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics.
- A stiff test for the market's rebound, coming at an interesting spot. The S&P 500 rebounded a speedy 8% from the Jan. 24 correction low and rose right up to the lower end of an old congestion zone in the 4,600s.