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But according to the WOLF STREET dictum, “Nothing goes in a straight line.”
By Wolf Richter for WOLF STREET.
Monday will be a good start. It can also start on Tuesday or November or anytime. And maybe not much fuss. But it’s cause for a picnic after the market breaks through in September, or indeed the end of the bear-market rally since August 16.
The demise of this bear market rally is drawing parallels with the dotcom bust, which was interrupted by a rally in the summer of 2000, when the Nasdaq Composite rallied 33% before ever returning to its previous highs, and then eventually fell 78%, from which it would not fully recover for 15 years, in July. 2015, after the Fed dumped trillions of dollars into the markets through QE. But then inflation was below the Fed’s target. Now inflation is flaring up. Well above The target of the federation.
So since this summer’s bear market rally ended on August 16, the S&P 500 index is down 16.7% and the Nasdaq is down 19.5%, both up slightly from February 2020.
After shooting up 100% in the past few weeks – many stocks on my Imploded Stocks list, like Carvana, have fallen 50% or more over the same period. [CVNA] It went from $20 on July 14, to $54.59 on August 16, and to $20.30 on Friday, September 30. It rose 170% in five weeks, and gave up all over the next six weeks. Carvana is down 95% from its daily high on August 10, 2021.
Still, how crazy this market is, and that’s why the bottom is not in sight, and there is no capital, but the shares are the reason for the excursion.
In September, the S&P 500 index fell 9.3%, its worst monthly decline since March 2020 and the worst September since the dotcom bust.
Every sector is broken in September, even energy. Health care was hit the least (-2.6%). The sectors that lost the most in September were: Information Technology (-12.0%), Communication Services (-12.1%) and Real Estate (-13.1%).
Year-over-year, energy was the only sector (+34.9%), although the sector was down 9.3% in September, according to S&P Dow Jones Indices.
Similar to dotcom auto, year-over-year: The two technology-related sectors — communications services and information technology — are down 31 percent and 39 percent, respectively. And many Big Tech stocks have fallen sharply from their respective highs; More in a moment.
| S&P 500 index sectors | September | YTD |
| Energy | -9.3% | 34.9% |
| Facilities | -11.3% | -6.5% |
| Consumer Staples | -8.0% | -11.8% |
| health care | -2.6% | -13.1% |
| Industries | -10.5% | -20.7% |
| Financial | -7.8% | -21.3% |
| Materials | -9.4% | -23.7% |
| real estate | -13.2% | -28.9% |
| Consumer skills | -8.1% | -29.9% |
| information technology | -12.0% | -31.4% |
| Communication services | -12.2% | -39.0% |
But it’s worse compared to their respective highs:
The S&P 500 index closed Friday at 3,586, down 25.6% from its January 3 high and first since November 2020.
The Russell 2000, which tracks small-cap stocks, fell 31.8% from November 5, thus maintaining its function as an early warning sign.
The Nasdaq closed at 10,576, down 34.8% from its intraday high on Nov. 22, the day Microsoft CEO Satya Nadella dumped 50.2% of his Microsoft shares in a bold trade totaling $285 million. On any list of insider trades at the best time ever, it should be at the very top. Since then, Microsoft shares have fallen 33.4%, to $232.90, the lowest closing price since March 2021.
Big Tech has fallen from recent highs.
But Microsoft is the second-best performer among a cadre of big tech stocks. Apple is the best performer, down 24.5% from its early January 2022 high.
The worst performing Big Tech stocks were Meta, Netflix and Nvidia, all down 65% from their respective highs. These are big sales for big companies.
Two of these companies – Cisco and Intel – were at their peak 22 years ago. 22 years ago CCCC was down 51% and Intel was down 65%.
The “from high” drops shown in the table are the drops from the nearest heights.
| “Tech” giant | $, September 30 | From high | High day | |
| Apple | [AAPL] | 138.20 | -24.5% | 01/2022 |
| Microsoft | [MSFT] | 232.90 | -33.4% | 11/2021 |
| Tesla | [TSLA] | 265.25 | -36.0% | 11/2021 |
| Alphabet | [GOOG] | 96.15 | -36.8% | 02/2022 |
| Amazon | [AMZN] | 113.00 | -40.1% | 07/2021 |
| Cisco | [CSCO] | 40.00 | -37.8% | 12-2021 |
| sales force | [CRM] | 143.84 | -53.9% | 11/2021 |
| Adobe | [ADBE] | 275.20 | -60.7% | 11/2021 |
| Intel | [INTC] | 25.77 | -62.3% | 04/2021 |
| Meta | [META] | 135.68 | -64.7% | 09/2021 |
| Nivea | [NVDA] | 121.39 | -65.0% | 11/2021 |
| Netflix | [NFLX] | 235.44 | -66.4% | 11/2021 |
Big Tech stocks are now back to where they were…
- Apple: January 2021
- Microsoft: January 2021
- Tesla: January 2021
- Letter: January 2021
- Amazon: April 2020
- Cisco: November 1999. It peaked at $82 in March 2000 and has spent 22 years down 51%, a nightmare-come-true for tech-stock buy-and-holds.
- Sales Force: July 2018
- Adobe: September 2018
- Intel: 1998. It peaked at $75 in a 2000 black market rally and spent 22 years down 65% — even a big tech stock buyout and owner’s nightmare come true.
- Meta: January 2017
- Nvidia: August 2020
- Netflix: April 2018
Such a bubble can be violent when released. As Cisco and Intel have shown, some stocks may “never” recover to their bubble highs — “never” meaning “never” or beyond the time frame appropriate for long-term investors. During the dotcom bust years and the years that followed, hundreds of stocks were lost, either going to zero or being bought for a few dollars a share. We only remember the winners like Amazon who got off the dotcom bus. But Amazon was rarely an exception.
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