In the midst of turbulent market conditions, it is essential for investors to maintain a steady hand. While pinpointing the exact bottom of this current downturn remains elusive, a plethora of premier stocks are now trading at compelling price points.

Despite the recent string of bearish triggers, it is crucial to remember that stocks are currently marked down, and the world is not hurtling towards an imminent demise. Stepping back for a moment, it becomes apparent that even after this downturn, numerous stocks and the broader market continue to boast healthy year-to-date gains.

Several of the leading stocks and companies have taken substantial dips from their recent peaks, including tech giants like Apple (AAPL), Amazon (AMZN), Meta Platforms (META), Alphabet (GOOGL), and standout ETFs like QQQ and SPY.

Investors are not required to dive in headfirst today, but gradually building a watchlist and making purchases as volatility recedes should be the modus operandi.

Image Source: Zacks Investment Research

Unpacking Recent Market Events

Last week unfolded as one of the most eventful periods of the year, with earnings releases from numerous tech behemoths, an FOMC meeting, a discouraging employment report hinting at a looming recession, and a substantial policy adjustment from the Bank of Japan. If there were ever a juncture for the market to realign as it is currently doing, this seems to be the moment.

Why did these occurrences trigger such a swift sell-off? It all began with the tech sector. During the earnings calls from Microsoft, Alphabet, and Meta Platforms, investors expressed unease about the hefty capital expenditures allocated to AI, with minimal profits to exhibit in return. Concerns regarding an AI bubble surfaced, prompting investors to offload many AI-centric favorites.

It is vital to recognize that beyond the substantial capex, these tech companies posted remarkable earnings and remain steadfast in their belief regarding the enduring value of their AI infrastructure investments.

Subsequently, on Friday morning, the second dismal employment report of the week emerged. The unemployment rate ascended to 4.3%, sparking concerns about an impending recession.

Lastly, the monetary policy adjustment by the Bank of Japan added the final piece to this triad of bearish developments. Given Japan’s lag in monetary tightening compared to other central banks, the recent initiation of interest rate hikes further exacerbated the situation.

The ripple effect on the US stock market is somewhat convoluted, but essentially, it signifies a reduction in cheap capital availability. The unwinding of the carry trade is underway. With interest rates in Japan historically low, investors would borrow in Yen and leverage those funds to purchase assets worldwide, including stocks. As this funding avenue diminishes, numerous investors face margin calls on their leveraged investments, triggering additional sales.

Are Further Stock Declines on the Horizon?

My inclination leans towards this correction nearing its conclusion rather than commencing afresh. While the triggers for the sell-off are disquieting, they are likely transient. Although the unemployment rate spiked, the US economy exhibits no supplementary recession indicators. Moreover, the Federal Reserve is on the cusp of commencing interest rate reductions, which will undoubtedly benefit both the economy and stock market.

Regarding the unwinding of the Yen carry trade, we are currently amid this process, but market dynamics are currently reflecting this development. Unless additional systemic issues arise, this phenomenon should gradually dissipate.

As for artificial intelligence, this catalyst presents the most uncertainty moving forward. Was it merely hype, or will it yield the productivity and profit enhancements it pledged? The likelihood leans towards a positive outcome, albeit potentially unfolding over a more extended timeline than initially anticipated by investors.

The major tech firms are brimming with profits and are continuing to expand their operations at impressively robust rates. Investors will undoubtedly acknowledge this, prompting a wave of buyers into the fray.

Premium Technology Stocks at Discounted Prices (Amazon, Alphabet, Apple, Meta)

Today presents a bargain sale on all my favored stocks. Amazon, Alphabet, Apple, and Meta Platforms are exhibiting growth reminiscent of fledgling startups, yet they stand as trillion-dollar juggernauts. Amazon anticipates a 30% annual earnings growth over the next 3-5 years, while Meta envisions a 20% surge. The trajectory is slightly more tempered for Alphabet and Apple, with growth rates at 17.5% and 12.7%, respectively, nonetheless impressive figures.

Moreover, all stocks in this cohort are trading at reasonable valuations. AMZN, META, and GOOGL are all below their 10-year median valuations, with AAPL currently sporting a premium.