Just days after the Nasdaq triumphantly rose above the 6,000 level to set new record highs, a blitz of mixed big-tech earnings seemed to rattle investors. Suddenly, the reality of uneven results deflated ebullient emotions in key mega-cap stocks.
After all, the stock market has been more expensive -- on a cyclically adjusted price-to-earnings ratio -- only two other times in history: The manic run-ups to the 1929 and 2000 bubble peaks.
This comes after U.S. equities mostly drifted lower on Thursday on lingering disappointment with the "big league" tax reform proposal from President Trump's cabinet on Wednesday. It lacked specifics and faces uncertain prospects in Congress. It landed amid uneven economic data as well.
The overall takeaway is that many of the justifications for the historic post-election market rally -- which has carried the Nasdaq to a gain of more than 20 percent from its November low -- suddenly look unsteady.
To be sure, there are bright spots.
Alphabet (GOOG) reported better-than-expected earnings of $7.73 per share (vs. $7.48 expected) on $24.8 billion in revenues (vs. $19.7 billion expected), thanks to strong advertising sales. Shares gained 4 percent in extended trading Thursday evening. And Amazon (AMZN) reported $1.48 in earnings per share (vs. $1.03 expected) on $35.7 billion in revenue (vs. $35.4 billion expected), up 22.6 percent from last year. Shares jumped 3.9 percent in extended trading.
But the disappointments stung.
Microsoft (MSFT) reported earnings of 73 cents per share that beat expectations of 69 cents, but the $22.1 billion in revenue came in short of forecasts for $23.6 billion. Shares fell 0.5 percent in Thursday's extended trading as investors worried about sales slowdowns in areas including enterprise services and Surface revenue.
Intel (INTC) reported earnings of 66 cents per share (vs. 65 cents expected) on $14.8 billion in revenues (in line with estimates). Still, its shares dropped 3.6 percent in extended trading on concern over its Data Center Group, a cornerstone of Intel's post-PC strategy.
A few factors are at work here. Overall, FactSet estimates S&P 500 earnings growth for the first quarter will come in 9.2 percent higher than the same period last year, the best performance since the end of 2011. Much of this was predicated on a rebound in energy prices, hopes of pro-business policies from the Trump administration and expectations of rising GDP growth.
Over the last few weeks, these tailwinds have abated.from its mid-April high on oversupply concerns, which will weigh on energy sector results in the second quarter. The Atlanta Fed marked down its first-quarter GDP growth estimate to just 0.2 percent on Wednesday based on weak manufacturing activity and tepid retail spending.
And President Donald Trump seems increasingly hamstrung by political gridlock and fiscal realities.
It's also worth remembering that certain headwinds are increasing as well. The Federal Reserve is becoming increasingly aggressive in its monetary policy tightening campaign. A tighter job market is increasing wage pressure and boosting labor costs. Trade tensions are rising.
And overall corporate profits remain about $100 billion below their late 2014 high -- a drop of nearly 6 percent during which Nasdaq rallied nearly 30 percent.