Risk-off
Tesla and Nvidia are among the heavyweights that tumbled in Wall Street’s worst quarter since 2022. Better performance came from stocks that made headlines much less often.
‘Liberation Day’ added fuel to a fire that was already spreading quickly across the U.S. economy. News of more tariffs worsened market sentiment amid inflation and recession fears. The S&P 500, Dow Jones and Nasdaq had another week of declines and the VIX spiked 15% to round out the weakest quarter since 2022.
Most U.S. companies ended their earnings calls on a sour note. FactSet noted that 64% of S&P 500 firms issued negative EPS guidance for Q1. And the tech sector had the largest increase in negative guidance.
Indeed, Nvidia ($NVDA) has dropped 20% this year, while the rest of the Magnificent Seven aren’t much better off. Tesla ($TSLA) is down 30% YTD and continues to lose market share, with CEO Elon Musk’s politics alienating some buyers entirely.
That incredibly grim picture begs the question: who’s actually winning in this market? You’d be surprised. A little over half the stocks in the S&P 500 are in the green, and some even have double-digit gains.
Healthcare giant CVS ($CVS) is up 50% YTD. Why? A solid Q4 earnings surprise for one, reporting US$97.7b in revenue and an adjusted EPS of US$1.19 vs the expected US$0.92. Plus, the firm’s leadership change (David Joyner replacing Karen Lynch as CEO last November) and insider buying (Director Mike Mahoney bought US$2m company stock) sent all the right signals to investors.
Uber ($UBER) is another stock driving higher amid a market rout. Investors did a double take after initially selling off shares post-earnings in February. The firm’s adjusted EBITDA for Q4 was US$1.84b – a 44% increase YoY. Gross bookings across its mobility and delivery (Uber Eats) segments came in higher than expectations.
But the broader theme in portfolio construction this week has been a flight to safety. It's no longer all about big tech, but defensive sectors like healthcare and consumer staples that seem more resilient in the face of uncertainty.
Risk-off sentiment also means gold is shiny again: the precious metal hit the US$3,000 mark and gold miners like Alamos Gold ($AGI) and Kinross Gold ($KGC) soared to 52-week highs. And the recent performance of Chinese equities like Alibaba ($BABA) suggests that investors have started to build exposure outside the U.S.
There will always be stocks that defy the trend. In times like these, it pays to be a little contrarian.
