CNBC - Earnings are showing signs of strain

Jan Szilagyi, Toggle AI CEO, said he is watching the tech sector carefully, and if the big tech names can weather negative earnings that would be a positive for the market.

“They may not lead the market to the upside, but at least they’re not going to be dragging them to the downside anymore,” he said. Those companies have been cleaning up balance sheets and reducing excess labor.

“All the layoffs, all the news seems to be around the tech sector. That isn’t all of the economy, but it’s hogging the limelight,” he said. “Those [earnings] announcements are going to be very telling.”

Szilagyi said so far during earnings, the reaction in the stock market is more muted than normal. When stocks miss, the declines have averaged about 1.6% on the day on average, versus a typical 3% decline, he said Thursday.

“You still get directionally the right response, but I think it’s possible after almost 13 months of being in a bear market, investors may have reached a level of exhaustion,” he said. Toggle is an artificial intelligence-driven research platform used by retail and professional investors. It can be used to predict price movements in stocks and other assets.

Szilagyi said the market continues to be in an interest rate driven cycle, led by Federal Reserve policy.

“If you were in a more normal non macro environment, you would assume you’d get a bigger reaction to earnings,” he said.

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