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KanawatTH
Wall Street posted its worst week since mid-April, as a rotation out of technology stocks sparked by last Thursday's consumer inflation report continued over the past few days. For the week, the Nasdaq (COMP:IND) was down 3.65% and the S&P (SP500) off 1.96%. Conversely, the Dow (DJI) was up 0.72% The primary 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 sparked by last Thursday's soft consumer inflation report. The data on consumer prices followed the June nonfarm payrolls report earlier this month that showed slowing jobs growth and an uptick in unemployment. With inflation moving in the right direction and the highly resilient labor market finally showing signs of cracking, investors have gained the confidence to start moving out of technology names and into other assets such as defensive and value sectors and small-cap stocks. The barometer for the latter - the Russell 2000 (RTY) - climbed 1.50% for the week.
"The lazy days of summer are here, and the laziest folks in town are buyers, who have mainly headed to the shore with the fruitful gains of their work since October 2022. We believe there is more correction yet to come as Q3 progresses," Alex King, investing group leader of Cestrian Capital Research, told Seeking Alpha.
"We do not think this is any kind of End of Days or Grand Reckoning, merely a seasonal selloff into the election. We believe all indices will be up from here by year-end; in the meantime, we believe hedging is the investor’s friend as the quarter continues," King added. Read a preview of next week's major events in Seeking Alpha's Catalyst Watch.
The Trump Trade
Bitcoin (BTC-USD) and Trump Media (DJT) experienced a run-up on Monday following an assassination attempt on Donald Trump at a campaign rally in Pennsylvania. Republican wins would likely result in extended tax cuts, protectionist trade policies, and looser regulation for hot-button topics like climate change and cryptocurrency. Over at the Republican National Convention, Trump selected Ohio Senator J.D. Vance as his running mate, sending shares of conservative-focused Rumble (RUM) - in which Vance is an investor - surging 29% on Monday. Here are five stocks to play the Trump Trade. (327 comments)
Not waiting
Recent data helped the Fed's confidence that inflation is moving sustainably toward 2%, according to Jerome Powell, although the central bank may not hold out until things end up there. "The implication of that is that if you wait until inflation gets all the way down to 2%, you’ve probably waited too long, because the tightening that you’re doing, or the level of tightness that you have, is still having effects which will probably drive inflation below 2%," Powell said at an event hosted by the Economic Club of Washington, DC. He also added that getting the balance right between easing too early or too late is what keeps him up at night. (16 comments)
Prime time
Amazon (AMZN) set a new Prime Day record, selling the most items during the two-day event this year than ever before. The e-commerce giant said millions more Prime members shopped during the event compared to Prime Day 2023, and independent sellers sold over 200M 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 $14.2B this Prime Day, up 11% from a year ago, highlighting strong consumer spending despite high inflation. (32 comments)
Streaming situation
Netflix (NFLX) shares fell 2% AH on Thursday as the streaming giant's revenue and user growth surpassed expectations, though free cash flow took a step back. The stock later pared losses to trade largely unchanged once Netflix started its post-earnings call, as executives gave lengthy answers about the quarter and their outlook. There was plenty to be pleased with, with CFO Spence Neumann detailing outsized paid net additions, stronger acquisition, and "very healthy" retention. He also raised this year's operating margin target to 26% from the prior 25%, although Investing Group Leader Long Player warned of limits to margin expansion. (2 comments)
Flip the switch
Our modern world is very interconnected. So interconnected that when one little piece of the system goes sour, it can bring down entire industries. Outages were seen across the world early Friday, impacting everything from airports and health providers to banks and stock exchanges, and many Microsoft (MSFT) system users faced the "blue screen of death." While there was some initial confusion over the origin of the outage, cybersecurity provider CrowdStrike (CRWD) admitted guilt in the ensuing hours, tracing the issue to "a defect found in a single content update for Windows hosts." The news sent its shares down as much as 20% and lifted several rival cyber stocks. (6 comments)
Notable Ratings From SA Analysts
Berkshire Hathaway Relative Value Has Improved by Fishtown Capital.
3 Reasons Walgreens' High Dividend Yield Isn't Worth It by Manika Premsingh.
Realty Income: Why This Growth Investor Is Coming Back To The Name by Julian Lin.
Weekly Movement
U.S. Indices
Dow +0.7% to 40,288. S&P 500 -2% to 5,505. Nasdaq -3.7% to 17,727. Russell 2000 +1.6% to 2,183. CBOE Volatility Index +32.6% to 16.52.
S&P 500 Sectors
Consumer Staples +0.9%. Utilities -1.6%. Financials +1.2%. Telecom -2.9%. Healthcare -0.3%. Industrials +0.6%. Information Technology -5.1%. Materials -0.5%. Energy +2%. Consumer Discretionary -2.7%. Real Estate +1.3%.
World Indices
London -1.2% to 8,156. France -2.5% to 7,535. Germany -3.1% to 18,172. Japan -2.7% to 40,092. China +0.4% to 2,982. Hong Kong -4.8% to 17,418. India +0.1% to 80,605.
Commodities and Bonds
Crude Oil WTI -3% to $78.6/bbl. Gold -0.7% to $2,402.8/oz. Natural Gas -8.8% to 2.124. Ten-Year Bond Yield -0.2 bps to 4.243.
Forex and Cryptos
EUR/USD -0.19%. USD/JPY -0.26%. GBP/USD -0.57%. Bitcoin +12.4%. Litecoin +4.8%. Ethereum +10.4%. XRP +11.2%.
Top S&P 500 Gainers
Warner Bros. Discovery (WBD) +17%. D.R. Horton (DHI) +13%. Solventum (SOLV) +11%. UnitedHealth Group (UNH) +11%. Huntington Bancshares (HBAN) +10%.
Top S&P 500 Losers
CrowdStrike Holdings (CRWD) -18%. Domino's Pizza (DPZ) -18%. The Charles Schwab (SCHW) -18%. Advanced Micro Devices (AMD) -17%. Vistra (VST) -16%.
Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.
