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Mega-cap stocks slide this week as retail and chip sectors tank

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

Video Transcript

- We are 90 minutes into the trading day on this Friday. And we are seeing red across the board here, although certainly not the kind of losses we've seen over the last few days. The Dow down 181 points, the S&P 500 down 18, and the NASDAQ down 66. Stocks headed for its seventh straight week of declines. And that is by the way, the longest losing streak since the dot.com bubble burst.

Taking a look at where the sectors are right now, we are seeing consumer discretionaries continuing to sort of lead the losses, although actually in a retail now down more than 3%. Energy the only one in the green. Some of the sentiment that we're seeing today spilling over from what we saw in the Asia session, although we should say, we have seen the sentiment turn a bit in the US session here, where we saw China's Central Bank overnight cutting a key interest rate to spur lending in the housing market. The economy there of course, seeing significant disruptions stemming from the COVID lockdowns.

One of many things that we heard about this week, especially from some of those big retailers that led to the declines. And Jared Blikre is here with us at the desk. So let's walk through the week that was.

JARED BLIKRE: Yes, a little bit of bad news here. But I think it's worth recapping, because there are some lessons to be learned and also some hints about where we could be with respect to the market sell off and where we're going to go from here. So let's go to the Wi-Fi interactive, which I am controlling remotely, admittedly. And this is what's happened today.

So we see some big losers here. Dollar General down 7%. But let's take a look at the week that was and some huge outsized losses here. I'm going to sort by performance. At the top it wasn't all bad. Foot Locker in the grain thanks to earnings. TJX and other green earnings story.

But Target right there at the bottom, down 30%. Ross stores down 20%. Walmart right there with it. So is Dollar Tree and the list goes on. Now, I've been talking about this theme where we've seen the soldiers fall. And that would be, I would say, some of the smaller names. It kind of started with software.

So let's go to software and a year to date look just shows more of the same. I don't to go down all the names. I do that often enough. But I do want to highlight that these guys fell first. Now we're seeing the generals, the mega caps, they are capitulating.

And I see a lot of analysis from people I respect, they're looking for a little bit more downside in some of these big names. So if we see Apple down, I've been saying this down 8%, 10%. We haven't seen that yet. That could be a sign that we are going to potentially see the worst behind us. But I don't think we're there quite yet.

- So I guess the natural question here, Jared, is that when you have large movements in those specific stocks it makes sense that the broader markets are going to be taking a pretty harsh spill as well. Where does it stop? Because I was looking at some notes, BTIG saying that they have a higher conviction that SPX, somewhere 3400, 3500 might be the better call than, say, a rally to 4200. It seems like the knife is not necessarily done falling yet. Are you getting the same read?

Yeah, I think we're going to-- I've been saying this for most of the week. I think we're due for a flashy bear market rally here. And the S&P 500 is still holding its lows. We could easily see a 10% move to the upside. I just think it's going to be short lived. I don't think we've seen the generals fall yet.

And one of the generals also, a hedge fund, Melvin Capital only this week going. It's going to be interesting to see. Sometimes these things shake out over the weekend. So if there's some funds in trouble, we might get some bad news on Monday. We might see some further selling then.

What I do want to point out. Let's go to the Wi-Fi interactive one more time. And so this is what's happened in meme stocks this week. They were on a tear going back to about Thursday, Friday of last week. So if we put a 10 day, it's still looking pretty grim there. But what I liked in the price action here is that when the generals were selling off, when Walmart and Target were having the worst day since 1987, the meme stocks weren't off that much.

Some of the other leaders, you'd call these the fringe market, like cannabis stocks, you know betting stocks, all these things really weren't selling off that much. So it tells me that I think for the soldiers, most of the damage has been done. But we're still we've got to shake out the megas. We've got to shake out the mega caps here.

- Feel like we need a graphic here between the soldiers and the generals. You said the magic number to look for in the S&P 500 is 38, 37.

JARED BLIKRE: Yeah, 38, 37.24. So we get that, that's the official bear market. I don't like the definition of bear markets just being 20%. It's arbitrary. But everybody recognizes it. And when it happens you see it on the evening news and then people look at their 401(k). So it does matter in that sense.

- Yeah. It's certainly rattles.

JARED BLIKRE: Yes.

- People even if--

JARED BLIKRE: Rightly so.

- Could be arbitrary. All right, Jared. Thanks so much for keeping track of that.