Wall Street posted its worst week since mid-April as the rotation out of technology stocks triggered by last Thursday’s consumer inflation report continued over the past few days. For the week, the Nasdaq (COMP:IND) fell 3.65% and the S&P (SP500) fell 1.96%. Conversely, the Dow (DJI) gained 0.72%. The main driver of this week’s loss in the S&P 500 (SP500) was a continued rotation out of technology stocks. The unwinding of the “tech trade” was triggered by last Thursday’s weak consumer inflation report. The consumer price data followed the June nonfarm payrolls report earlier this month, which showed slowing job growth and rising unemployment. With inflation trending in the right direction and the highly resilient labor market finally showing signs of cracking, investors have gained confidence to start moving out of tech names and into other assets such as defensive and value sectors and small-cap stocks. The bellwether of the latter — the Russell 2000 (RTY) — has climbed 1.50% for the week.
“The lazy days of summer are here, and the laziest people in town are buyers, who have mostly headed to the shore with the fruitful earnings from their work since October 2022. We believe there will be more corrections to come as the third quarter progresses,” Alex King, head of the investment group at Cestrian Capital Research, told Seeking Alpha.
“We don’t think this is some kind of end-times or grand reckoning, but simply a seasonal sell-off as we approach the election. We think all indices will be up by the end of the year; in the meantime, we think hedging is an investor’s friend as the quarter continues,” King added. Read a preview of next week’s major events in Seeking Alpha’s Catalyst Watch.
Bitcoin (BTC-USD) and Trump Media (DJT) surged Monday after an assassination attempt on Donald Trump at a campaign rally in Pennsylvania. Republican victories would likely bring extended tax cuts, protectionist trade policies and looser regulation on hot-button issues like climate change and cryptocurrency. At the Republican National Convention, Trump picked Ohio Sen. J.D. Vance as his running mate, sending shares of conservative-leaning Rumble (RUM) — in which Vance is an investor — up 29% Monday. Here are five stocks to consider in the Trump Trade. (327 comments)
Jerome Powell said recent data have reinforced the Fed’s confidence that inflation is headed toward 2% for good, even though the central bank may not hold out until things end there. “The implication is that if you wait for inflation to get down to 2%, you’ve probably waited too long, because the tightening that you do, or the amount of tightening that you do, still has effects that are likely to push inflation below 2%,” Powell said at an event hosted by the Economic Club of Washington, D.C. He also added that finding the right balance between easing too early and too late is what keeps him up at night. (16 comments)
Amazon (AMZN) set a new record for Prime Day, selling the most items during the two-day event this year. The e-commerce giant said millions more Prime members made purchases during the event than Prime Day 2023, and independent sellers sold more than 200 million items. Other highlights included the new AI-powered conversational shopping assistant and more visits to Amazon Inspire — the in-app experience designed to make shopping easier. Adobe Analytics estimated that shoppers spent $14.2 billion this Prime Day, an 11% increase from last year, highlighting strong consumer spending despite high inflation. (32 comments)
Netflix Stock (NFLX) fell by 2% The streaming giant reported Thursday that its revenue and user growth beat expectations, even as free cash flow fell. The stock then pared losses to be virtually flat once Netflix began its post-earnings conference call, as executives gave lengthy answers about the quarter and their outlook. There was plenty to cheer about, with CFO Spence Neumann detailing outsized paid net additions, stronger acquisitions and “very healthy” retention. He also raised this year’s operating margin target to 26% from 25%, though the head of investment group Long Player cautioned about the limits of margin expansion. (2 comments)
Our modern world is highly interconnected. So interconnected that when one small piece of the system goes bad, it can bring down entire industries. Outages were seen around the world early Friday, affecting everything from airports and healthcare providers to banks and stock exchanges, and many Microsoft (MSFT) system users were experiencing the “blue screen of death.” While there was some initial confusion over the source of the outage, cybersecurity vendor CrowdStrike (CRWD) admitted culpability within hours, attributing the problem to “a flaw found in a single content update for Windows hosts.” The news sent shares soaring down by up to 20% and has raised several rival cyber actions. (6 comments)
