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Why investors should stop fixating on Apple and Tesla in 2023

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This article first appeared in the Morning Brief. Get the Morning Brief delivered directly to your inbox Monday through Friday at 6:30am ET. Subscribe

Thursday, January 5, 2023

Today’s bulletin is from Jared Blikre, a markets-focused reporter for Yahoo Finance. Follow him on Twitter @SPYJared. Read this and more market news anywhere with Yahoo finance app.

Two trading days into the new year, and 2023 is already off to a rocky start for Apple (AAPL) and Tesla (TSLA), arguably the two most important stocks for US investors.

While both stocks managed to finish with gains on Wednesday, they remain submerged in the new year after each hit new 52-week lows on the first trading day of 2023.

Tesla’s 12% tumble on Tuesday was its worst one-day performance since 2020. Apple’s decline earlier in the year saw the iPhone maker lose its status as the last US tech giant with a value of market above US$ 2 trillion.

And as a bevy of new leaders are emerging in the S&P 500 index, history suggests these two stocks are unlikely to retain their top-choice status for investors for years to come.

Over the past three months, some of the biggest companies by market capitalization have seen stocks take the hardest hit, with Tesla leading the pack, losing 55%.

In that time, Amazon (AMZN) is down nearly 30%, while Apple and Alphabet (GOOG, GOOGL) are down about 13% each.

Compare that to the performance of some big names in the healthcare, financial and consumer staples sectors last quarter, and we can see the changing of the guard unfolding in real time.

Pharmaceutical company Merck (MRK) is up more than 25% over the past three months, while major bank JPMorgan Chase (JPM) is up 20% and consumer staple Procter & Gamble (PG) is up more than 15%.

Historically, market leaders have not spanned multiple bull markets and decades.

The top five stocks at the height of the dot-com bubble in 2000 were Microsoft, Cisco (CSCO), General Electric (GE), Exxon Mobil (XOM) and Intel (INTC).

According to research by Goldman Sachs, these names represented 18% of the S&P 500’s market cap at the time. Today, they represent only 8%.

Contrast these names with the leaders at the start of 2022, which is increasingly seen as the end of the era of low interest rates that has persisted for over a decade.

These leaders were Apple, Microsoft, Alphabet (GOOGL, GOOG), Amazon (AMZN) and what is now Meta Platforms (META).

That group achieved an impressive 25% concentration in the S&P 500 at the start of the pandemic — a share that has already shrunk to 18% today.

Only Microsoft spans both eras, although even that is a bit misleading as the stock fell out of the ranks of the biggest names in the market after the tech bubble burst, only to later re-emerge under the leadership of Satya Nadella in late 2019. 2010.

Exxon Mobil is another interesting case.

The company ceded its crown as the largest public company in the US in 2013 to Apple. Stocks were subsequently decimated by two oil crashes, first in 2014 and then in 2020. However, as crude oil has surged over the past two years, so have energy stocks. Now, Exxon is once again in the top ten, occupying the eighth position.

Screens display trading information for ExxonMobil on the trading floor of the New York Stock Exchange (NYSE) in New York City, USA, December 9, 2022. REUTERS/Brendan McDermid

Screens display trading information for ExxonMobil on the trading floor of the New York Stock Exchange (NYSE) in New York City, USA, December 9, 2022. REUTERS/Brendan McDermid

The remaining companies of the top five in 2000 – Cisco, Intel and GE – are still well below their records of two decades ago. GE, meanwhile, is 85% off its 2000 record; on Wednesday, its healthcare facility began life as a separate publicly traded company.

Of course, the future is not predetermined in any market environment, and investors will be looking to price in a host of game-changing unknowns this year.

Key to these unknowns will be a debate over whether or not the bear market bottom is, and when the Federal Reserve will eventually turn.

Regardless, investors will likely be better served in the new year – and the new era – by keeping an open mind rather than fixating on yesterday’s broken leaders.

Even if those broken leaders are domestic stocks like Apple and Tesla.

what to watch today

Economy

  • 7:30 am ET: Challenging job cutsyear on year, December (416.5% in the previous month)

  • 8:15 am ET: ADP job changeDecember (150,000 expected, 127,000 during

  • last month)

  • 8:30 am ET: Trade balanceNovember (-$63.1 billion expected, -$78.2 billion during prior month)

  • 8:30 am ET: Initial unemployment claimsweek ended December 31 (225,000 expected, 225,000 during the previous week)

  • 8:30 am ET: Continuing Claimsweek ended December 24 (1.727 million in the previous week)

  • 8:30 am ET: S&P Global US Services PMIend of December (44.4 expected, 44.4 during previous month)

  • 8:30 am ET: S&P Global US Composite PMIend of December (44.6 during the previous month)

earnings

  • AngioDynamics (ANGO), conagra (CAG), constellation marks (STZ), Helen of Troy (HELE), Walgreens Boots Alliance (WBA)

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