The S&P 500 and Dow both marked record closes on Tuesday
The Dow Jones Industrial Average’s (DJI) string of record highs highlighted the week, with the blue-chip index marking a massive 742-point win on Tuesday — its best day in over a year. The S&P 500 Index (SPX) and Nasdaq Composite (IXIC) pulled back from their extended rallies as investors rotated out of tech, though the former still managed a record peak earlier on Tuesday as well.
The Dow is headed for a strong weekly win, while the other two major benchmarks eye weekly losses — the Nasdaq looking to end a six-week win streak. Amid all this, earnings season also kicked off with the usual flood of reports from big banks, while Wall Street became increasingly hopeful of a rate cut in the short term.
Tech Sector News
Investors rotated out of tech stocks and into cyclical stocks that stand to benefit from interest rate cuts this week. Taiwan Semiconductor (TSM) brushed off a strong second-quarter report and pulled back from its record peak, while Palantir Technologies (PLTR) nabbed a three-year high. Netflix (NFLX) announced strong second-quarter results of its own due to subscriber growth, but issued disappointing current-quarter forecast.
Microsoft (MSFT) pulled back from early July record highs, but has technical support in place. Plus, news that the Biden administration will tighten trade restrictions with China pressured semiconductor stocks, and CrowdStrike’s (CRWD) cybersecurity update sparked an IT outage around the globe.
Analyst Notes This Week
There were plenty of rating adjustments amongst the brokerage bunch. Shopify (SHOP) stock surged on the heels of an upgrade from Bank of America, while elf Beauty (ELF) and Arm Holdings (ARM) attracted bull notes as well. Meanwhile, medical equipment name Baxter International (BAX) received a downgrade on margin concerns, and Morgan Stanley named Gap (GPS) a “top pick.”
What’s Coming Up
There’s a host of economic data coming next week as July winds down, as well as a barrage of earnings reports. Schaeffer’s three-tiered methodology named Expectational Analysis® can help investors take advantage of the volatility of earnings season to turn a profit. In the meantime, Schaeffer’s Senior V.P. of Research Todd Salamone dug into what the recent market sentiment could mean for stocks, while Senior Quantitative Analyst Rocky White talks about the outperformance in small caps.