Market rout continues as mega-cap tech accelerates losses

Yahoo Finance Live's Jared Blikre breaks down midday trading in the stock market.

Video transcript

- Jared, it's a familiar story that we're seeing tech once again leading the NASDAQ lower.

JARED BLIKRE: Yes, it is. And let's just go to the NASDAQ 100 heatmap. And we can really see the damage that's being done. I showed the worst yearly performers before just a few minutes ago and just want to review, kind of recap what's going on here.

We are in the midst of a megacap tech route and we're only seeing the losses accelerating. Nevertheless, the Dow trying to turn green right now. Unlikely, as I've been pointing out, to do that two days in a row, but anything could happen. I think the bottom line is that we are in a very low liquid environment and everybody's waiting to see what the Fed does later on this week. That's going to be coming tomorrow. In exactly 24 hours here, we're going to bring that to you live.

But you take a look at what's happening in the semiconductor space. A lot of deep red here. You take a look at what's happening in the software space. It's a very similar story. I don't need to go through the numbers.

And finally, ARK. This is just a hot spot of inactivity right now. We're just not seeing the buyers swoop in the way we have in the past. And there is an important note that came out, not only from JPMorgan, but also Goldman Sachs and some others, looking at retail flows. Retail flows have been very strong this year, except that abated last Thursday and Friday.

And yesterday, yesterday morning was a capitulation day for the retail trader. All in all, it looks like retail traders may have finally put in the bottom for them, but the institutional guys, they have to come in and do that as well. Unfortunately, we haven't seen that just yet, guys.

ALEXIS CHRISTOFOROUS: Yeah, got to try to get those institutional and investor traders on the same page. I want to talk earnings, because we've been talking all day long about-- or all week long about how a lot of them have been less than spectacular. We heard from some big names today, GE, a revenue miss there. 3M came in better than expected. Break down some of the big ones for us, Jared.

JARED BLIKRE: Sure. Let me start out with GE, and they're not part of the Dow anymore, so you might have to bring up your own ticker. But this was kind of a decent quarter for them, although the stock sank by about 5% or 6% in early trading. So the revenue at GE in aviation particularly disappointing. This is according to a Bloomberg analysis.

It rose 4%, while analysts had been expecting a double digit gain. And then they're also suffering from supply chain constraints, like just about everybody else is in this market. They took their toll across the company's business.

GE Healthcare, they got hit hard. They got hit for 800 or 900 basis points of revenue pressure, and that's because they couldn't get the orders out of the door. That's what Larry Culp said in an interview. Thank you for that.

The good news. GE reduced its pension deficit to $12 billion, and it is now down $8 billion from 2020. That was a major pain spot for them. So they have been doing work on that turnaround front. And they also said they don't expect any pension plan funding through the end of this decade.

Also want to check out 3M earnings because the revenue narrowly beat analysts' estimates and the Omicron coronavirus actually increased the near-term supply-- not supply, demand for their masks. Also it was a story about Post-it notes and tape. Their consumer division did very well this year. So 3M benefiting from that.

Finally, I want to touch on Raytheon Technologies in our industrial group. Pratt & Whitney jet engine division, they showed encouraging signs that the recovery in commercial aviation is underway. That was an important milestone to be reached. And also lower production of Boeing 787 Dreamliner. That is hurting the company, and that is because it is plagued by quality issues.

- And then J&J also reporting and missing on revenue before the bell. Let's turn our attention to what's coming after the bell because a lot of focus on Microsoft, and investors are looking at their cloud strength.

JARED BLIKRE: Yeah, exactly. And this is supposed to be their first quarter in which they're reporting $50 billion of revenue. That's just simply incredible. Here's a one-year chart, and let me put this on a line graph so you can see it a little bit easier. Well off the highs here, but it's not an absolute disaster. It's still looking at gains of 27% over the trailing year.

And I want to get to a Bloomberg analysis. And here we go. This is their preview. Their second quarter earnings expected to be "the first three-month period in which sales top $50 billion," exactly what I was just saying, "on continued strength in Azure cloud software." Also their web-based versions of the office programs. Results also expected to be boosted by holiday sales of Xbox consoles.

And so we have some of the numbers here. Top line number, revenue estimated to be 50.87 billion. And then you break it down by segment. I remember just a few years ago when they had three segments reporting $10 billion or more in revenue. That is up to 50.

So pretty incredible there. Productivity and business processes, 15.91 billion. Intelligent Cloud, 18.3 billion. Commercial Cloud, 21.2 billion. And then finally Adjusted EPS estimate, that is coming in at $2.32.

I want to get to some stats of what we can expect from Wedbush. Now they rate the stock an Outperform price target of $375. And they're saying, "based on our recent checks, we believe the company saw another robust performance in the December quarter led by Azure/Office 365 with our expectation to see a 3% top line beat and upside across the board, which should be a major boost in the arm for the overall tech sector looking ahead." We know the tech sector could really use a strong boost in the arm.