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Momentum meltdown?

Monday, April 07, 2014 - 02:15

April 7 - As momentum stocks struggle, analysts weigh in on how earnings season might help reinvigorate them. Lily Jamali reports.

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Will earnings season save momentum stocks from further beat downs? That is what a lot of investors as wondering as Wall Street kicks off the season this week. Reuters Editor Daniel Burns: SOUNDBITE: DANIEL BURNS, EDITOR, REUTERS (ENGLISH) SAYING: "Earnings can always be a brake or an accelerant in a weak stock circumstance and right now it's a pretty low bar for companies to clear - to exceed expectation. We're expecting first quarter S&P profit growth of 1.1% - negligible." Burns says the greater impact may come - not from earnings - but from companies' forward looking guidance. Any boost would be a welcome change for some momentum stocks. The tech sector has been particularly vulnerable to the selloff. The NASDAQ index is down 5.9% for the last thirty days. Among the high fliers getting their wings clipped: Twitter - down 23% over the past month. Amazon is down 15%, but video content company Netflix tops them both - losing 25% of its value last month. Outside of tech, Tesla is down 18% in the same period. Biotech firms, like Dendreon, down 9% last month - are also taking a beating. Burns says biotech's struggles have been sudden, and swift. SOUNDBITE: DANIEL BURNS, EDITOR, REUTERS (ENGLISH) SAYING: "The NASDAQ Biotech index is down almost 18% from its peak in late February so it's really just knocking on the door of a bear market for this group." It's not just because of what the companies are doing. It's about investors broader outlook on the economy, according to Peter Kenny, CEO of Clearpool Group. SOUNDBITE: PETER KENNY, CEO, CLEARPOOL GROUP (ENGLISH) SAYING: "We are seeing a rebound in the economy - we have continued to see that, but at a much less rabid rate than people were anticipating with quantitative easing." Kenny says recent trends signify a shift in what investors want, and it's more than just hope that they're after. SOUNDBITE: PETER KENNY, CEO, CLEARPOOL GROUP (ENGLISH) SAYING: "You're going to see more attention being paid to top line and bottom line growth - real actual growth - as opposed to growth in earnings as a result of financial engineering."

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Momentum meltdown?

Monday, April 07, 2014 - 02:15

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