Big tech companies experienced a 5.6% bump in their stock price this month following an announcement of job cuts. Find out more.
Looking past the short-term pop in stock prices, the risk is that the job cuts won’t be enough to offset the drop in earnings from a weakening economy. For now, investors broadly are optimistic that that won’t be the case: The Nasdaq 100 index has risen 8.7 per cent from its bear-market low in December, outpacing the S&P 500’s 4.8 per cent increase.Article content
“Some companies have gotten too much credit for modest cost reductions, which means we could be due for a pullback if numbers haven’t been fully de-risked,” he said.In the last bull market, ultra-low interest rates made it easy for companies to borrow money and fuel growth at any cost. Sales surged and margins were squeezed as companies heavily invested in expanding their footprints and headcount.
Activist investors have joined in to acquire stakes in large companies such as Salesforce and Walt Disney Co., and could pressure them to cut costs.
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