Breakfast on Wall Street: What Moved the Markets

The S&P 500 Index ended a turbulent week down nearly 1% on Friday, led by a continued decline in technology stocks. The S&P 500’s information technology sector has now fallen more than 7% in two weeks. Meanwhile, the market rotation continued, with the equal-weight S&P up about 1% on the week and the small-cap bellwether, the Russell 2000 (RTY), up more than 3%.

It’s been an eventful five days that saw market participants digest another twist in the US presidential race, followed by a dramatic stock drop in the middle and a rebound at the end. Eyes now turn to the Federal Reserve’s final interest rate decision next week, where the central bank is expected to pave the way for a rate cut in September.

For the week, the S&P (SP500) declined -0.8%while the tech-heavy Nasdaq Composite (COMP:IND) slipped -2.1%The leading Dow index (DJI) climbed +0.8%. Read a preview of next week’s major events in Seeking Alpha’s Catalyst Watch.

Under overwhelming pressure from top Democrats, President Biden abandoned his reelection bid and endorsed Vice President Kamala Harris as the party’s new presidential nominee. It took him just days to solidify the support of all major Democrats, including former President Barack Obama and Michelle Obama, as well as the party’s leaders in Congress. Harris is a staunch defender of Biden’s economic approach and is expected to stick to his foreign policy strategy. What does this mean for markets? “Not much at the moment,” said TS Lombard, noting that each party platform reflects a “Jacksonian rather than Hamiltonian tilt.” (68 comments)

The cryptocurrency world hit another milestone Tuesday with the launch of spot ether ETFs following their approval by the SEC. However, the nine new ETFs ended their first trading session lower, as the cryptocurrency fell and concerns about net inflows persist. Now that the funds are live, investors are focused on whether ETFs holding ether can achieve net inflows comparable to their bitcoin (BTC-USD) counterparts, although skepticism remains widespread. In related news, former President Donald Trump, a crypto detractor turned advocate, will headline the world’s largest bitcoin conference this weekend. (25 comments)

Stocks just keep going up. Until they don’t. The Nasdaq (COMP:IND) had its worst day of 2024 on Wednesday as the tech-heavy index fell more than 3% For the first time in over 400 trading days, the slide wiped out hundreds of billions of dollars in market capitalization from the Magnificent Seven, while Alphabet (GOOG, GOOGL) and Tesla (TSLA) both underwhelmed as investors demanded higher returns on their massive investments in AI. Seeking to halt the slide, U.S. GDP growth accelerated in the second quarter and beat estimates, highlighting resilient consumption and increased business spending in the face of economic concerns. (35 comments)

Boeing (BA) has formally pleaded guilty to the Justice Department for making false statements about key 737 Max software linked to two fatal crashes in 2018 and 2019. The DOJ noted that Boeing failed to ensure that employees documented the removal of parts during the plane’s manufacturing and failed to confirm whether mechanics and inspectors actually completed the work. “We will continue to work transparently with regulators as we take significant steps across Boeing to strengthen our safety, quality and compliance programs,” the planemaker said. It will also pay a $243.6 million fine as part of the settlement. (12 comments)

The Paris 2024 Olympics kicked off Friday, with the opening ceremony taking place amid tight security and arson attacks that disrupted France’s high-speed rail network. The Games will provide a big stage for U.S. companies associated with the Olympic Partnership Program, such as Airbnb (ABNB), Coca-Cola (KO) and Visa (V), as well as big spectator opportunities. However, the cost of hosting the event has risen in recent years. “When you add up all the costs and revenues, you always have to pay a debt somewhere,” says Robert Barney, director of the International Olympic Studies Centre at the University of Western Ontario. (5 comments)