Market Commentary

Mega Cap Stocks Head Lower as Macro Weighs on Results

Raza Akram · 1 minute read

It’s the peak earnings season with mega-cap stocks like Apple (AAPL:US), Amazon (AMZN:US), and Google parent Alphabet (GOOGL:US) reporting results for the December quarter. Shares of all three mega-cap companies are trading lower on Friday as the ongoing economic slowdown continues to leave consequences on businesses.

Apple delivered one of the rare misses with both earnings per share and revenue trailing the average analyst estimate. According to Apple, supply chain constraints and a difficult macro environment weighed on results. iPhone and Mac sales were especially disappointing as the key factory in China was closed for weeks due to Covid-19 rules and worker unrest.

Google’s results showed a worrying weakness in the ad business, a key source of revenue generation for the search giant. Finally, Amazon shares are trading down as the slowdown in key cloud business - AWS - is proving to be more severe than anticipated. This is despite improving profitability at Amazon’s key business - online sales. 

It was the Amazon stock that attracted some buying interest from Congress in the final weeks of 2022. Representatives Earl Blumenauer and Michael McCaul both invested in Amazon, where Mr. Earl bought corporate bonds worth up to $50,000 on Dec 22, while Mr. McCaul made two purchase transactions on November 15, both valued between $50,000 - $100,000, when shares closed at $98.94.

More interestingly, Nancy Pelosi and her husband Paul were big sellers of Google shares in late December. Three $500,000 - $1 million transactions were reported in the final 10 days of 2022 at prices in the high $80s. Still, Google stock went to rally about 20% from these prices in the subsequent weeks before falling on Friday in response to weaker-than-expected earnings.

Congressman Ro Khanna was selling Apple stock in November while it was trading around similar levels as it is trading these days.