Investors who have been bracing themselves for a potential stock market crash might be in for a rude awakening. For a group of fourteen beleaguered S&P 500 stocks, the market crash is already a harsh reality.
As per an analysis by Investor’s Business Daily, these fourteen S&P 500 stocks, including SolarEdge Technologies (SEDG), Enphase Energy (ENPH), and Moderna (MRNA), have suffered a significant decline of 50% or more from their 52-week high levels. This data is sourced from S&P Global Market Intelligence and MarketSmith.
These substantial losses within individual stocks reveal that much of the market’s struggles since late July have been somewhat concealed by the broader market indexes. While the S&P 500 has only fallen 8.8% from its 52-week high, the Nasdaq 100 is even closer to a 10% correction, down by 9.2% from its peak over the past year.
The root cause of this stock market turmoil can be traced back to rising inflation eroding returns and the allure of higher interest rates that have enticed investors seeking safer returns. Edward Moya of Oanda points out, “The stock market isn’t ready to rally until bond yields are sharply lower, which probably won’t happen until we see inflation a lot closer to the Fed’s target.”
Investors are anxiously awaiting a correction in the S&P 500, or possibly even worse.
The month of October, historically notorious for witnessing major stock market crashes, has many market participants on edge. Moreover, the S&P 500 has been struggling since reaching its peak this year in late July. Some have drawn comparisons between October 1987, the month of a significant crash, and 2023 so far.
Additionally, several of the prominent stocks that have been powering the S&P 500 throughout the year are losing steam. For instance, Apple (AAPL) and Alphabet (GOOGL) have both seen declines of 14% and 11% from their respective year-to-date highs, placing them in correction territory.
However, there’s a more severe downturn within the S&P 500.
Renewable Energy Stocks Under Pressure
Within the S&P 500, two leading solar energy companies are facing the brunt of the market turmoil. SolarEdge, a producer of solar power inverters, has witnessed its shares plummet by over 70% from its 52-week high recorded on February 15 of this year. In the same period, the company’s shares have dropped by 64.4%. Despite these declines, analysts anticipate a nearly 17% increase in the company’s profit this year, reaching $6.95 per share on an adjusted basis. Projections for 2024 are also positive, with analysts forecasting nearly 3% more profit growth.
Enphase Energy’s shares have also faced a substantial decline of more than 72% from their 52-week high on December 5. Similar to SolarEdge, Enphase is still experiencing growth. Analysts project an adjusted profit increase of over 6% in 2023 and a further 25% rise in 2024.
It’s not just the solar sector that’s struggling, as many other S&P 500 stocks find themselves in a challenging position.
Vaccine manufacturer Moderna has been grappling with a drop of over 64% in its stock price from its 52-week high on December 14 of the previous year. This decline is attributed to the waning concerns about Covid-19. Moderna is anticipated to report a loss of $4.24 per share this year, a stark contrast to the profit of $20.12 per share last year.
The future of the S&P 500 remains uncertain as more companies release their third-quarter results. However, given the severe losses experienced by some stocks, it’s evident that some investors are taking a cautious approach, wary of the current state of the stock market.
