As the market approaches the final three hours of the trading week (are there really still three hours left?), the average decline of the S&P 500’s individual components since the index’s closing high on 7/31 is now at -9.9%, but many stocks are down much more than that.  While less than one in five stocks in the index are up during this period, 81 stocks are down 20% or more, while another 166 are down between 10% and 20%.

In terms of the sector breakdown, the only sector with average gains among its components is Energy (+5.4%).  In addition to Energy, Communication Services, Financials, and Technology have all held up relatively better than the index itself while stocks in the Consumer Staples, Consumer Discretionary, and Real Estate sectors are down the most in aggregate.  While economic data seems to suggest the consumer is holding up, the performance of consumer stocks is telling a different story.

The second chart shows the percentage of components in each sector that have posted positive returns since the 7/31 high.  In five different sectors, less than 10% of components have posted gains, whereas Energy is the only sector where more than a third of components are up.  In fact, it’s closer to 90%!

Overall, there’s not a lot of positive things to say when it comes to equity market returns since the end of July, but the table below lists the 21 stocks in the S&P 500 that have rallied 10% or more since the close on 7/31. Topping the list is Eli Lilly (LLY) which has gained 30% on optimism over its weight loss drugs. Behind LLY, Progressive (PGR), and Arista Networks (ANET) are the only other stocks with gains of more than 20%.

In terms of sector representation, it’s not surprising that Energy is among the leaders with five different stocks on the list.  Along with Energy, though, both Financials and Health Care each have five stocks as well.  Overall, seven different sectors are represented, while four (Consumer Discretionary, Consumer Staples, Industrials, and Materials) are completely absent from the list. Not surprisingly, all four of these sectors have been among the worst performers since the 7/31 peak.

The Transports and the Semis are two groups typically viewed as “leading” indicators for the broader market.  Below is a check-up on how the two have done since the S&P 500’s bear market low was made on October 12th, 2022.  While the Transports (Dow Transportation Index) are now up 15.3% compared to the S&P 500’s gain of 19.5%, Semis (Philly Sox Index) are still up significantly more than both with a gain of 54.1%.

Below is a look at the performance spread between the S&P 500 and the Semis since the 2022 bear market low.  While the steepness of the outperformance for Semis faltered a few months ago, we haven’t quite seen the bottom of the uptrend channel significantly break down yet either.  It’s getting very close, though, so this relationship is one to watch in the near term.

Tesla (TSLA) reported Q3 earnings results on Wednesday after the close, and while shares initially had a somewhat sanguine response to the company’s weaker-than-expected results, they ultimately fell sharply on the day in Thursday’s trading.  TSLA’s full-day percentage change in response to earnings ended up clocking in at -9.3%.

What’s remarkable to us is that this was the third earnings report in a row where TSLA shares fell 9% in response to the news.  You can see TSLA’s quarterly results going back to the start of 2020 in the snapshot from our Earnings Explorer below where we’ve put a red box over the stock’s last three full-day earnings moves:

Below is a look at TSLA’s price chart since early 2023 with its last three earnings reaction days highlighted.

Ironically, even though shares have fallen 9% on Tesla’s last three earnings reaction days dating back to April 20th, the stock is actually up 21% over the entire period since the close on April 19th.

Individual stocks have four quarterly earnings reaction days per year, and while these days are typically much more volatile than the average trading day, as the action in TSLA shows, they’re not everything.

Earnings season has begun with the release of quarterly results of the big banks and the first of the mega caps, Tesla (TSLA), this week. However, the slate doesn’t truly ramp up until next week and the week after. That is in terms of both the number of stocks reporting and their collective market caps. In the chart below, we show the cumulative market caps of Russell 1,000 stocks reporting each day from this week through the end of November.  As shown, next Tuesday is the single most important day by market cap thanks to both Microsoft (MSFT) and Alphabet (GOOGL) reporting on the same day. That is followed by Meta Platforms (META) on Wednesday and Amazon (AMZN) on Thursday.  While AMZN makes up a massive portion of the market cap reporting next Thursday, it is also one of the busiest days of earnings season in terms of number of companies reporting.  That day, 126 Russell 1,000 members will release earnings. The only busier day will be the following Thursday with 129 stocks reporting. From there, earnings season will wind down but there will still be a couple more big reports like Berkshire Hathaway (BRK/B) on November 6th then NVIDIA (NVDA) on November 21st.

In yesterday’s Chart of the Day, we highlighted some stocks that have historically been the top performers on Q3 earnings.  In a similar vein, below we show the Russell 1,000 members with at least three years of earnings history that have historically averaged the largest absolute daily move in reaction to earnings. For each stock, we also show its historical beat rates (% of time the stock has beaten consensus analyst EPS and sales estimates) and the percentage of the time that it has raised guidance.

As shown, BILL.com (BILL) tops the list as the most volatile stock on earnings with an average one-day change of +/-18.1%.  Across its 15 quarterly reports as a public company, BILL has beaten revenue estimates every single time and missed EPS estimates just once.  It has also raised guidance on 8 of its 15 quarterly reports.  In addition to BILL, some other stocks that have been extremely volatile on their earnings reaction days include Roku (ROKU), Trade Desk (TTD), Pinterest (PINS), Unity Software (U), AppLovin (APP), Wayfair (W), Netflix (NFLX), Etsy (ETSY), Under Armour (UAA), Twilio (TWLO), and Zoom Video (ZM).  This list is a who’s who of many stocks that both surged during the post-COVID bull market in 2020 and 2021 and then plummeted during the bear market of 2022.

The S&P 500 has fallen over the past week, and that has given sentiment reason to shift lower.  The latest sentiment survey from AAII showed only 34.1% of respondents reported as bullish this week, down from 40% last week. That 5.9 percentage point decline is the largest single-week drop in a month although bullish sentiment is still above levels from two weeks ago.

Even though bullish sentiment dropped, those losses did not flow into bearish sentiment. In fact, bearish sentiment also fell by 1.9 percentage points. On top of the 5.1 percentage point decline in the prior week, at 34.6% bearish sentiment is unchanged versus one month ago.

The larger drop in bulls versus bears did result in the bull-bear spread shifting back into negative territory. While not a wide margin, bears outnumber bulls.

Neutral sentiment came in with the lowest reading in a year last week implying increasingly polarized investor sentiment. However, the declines in both bulls and bears this week resulted in neutral sentiment to climb up to 31.3% which is the highest reading in three weeks and right back in line with the historical average.