The dominance of the tech sector in the stock market can make it seem like Big Tech holds all the cards, steering stocks up even in less-than-ideal conditions. However, this past week saw a swift shift in fortunes. Initially propped up by dovish Fed remarks, the market took a hit from lackluster earnings reports by tech giants like Microsoft, Amazon.com, and Apple. Adding to the woes, troubling manufacturing data hinted at an impending recession, leaving investors questioning the Fed’s pace in interest rate cuts.
As if that wasn’t enough, a grim turn came with Friday’s disappointing jobs data. Among the top six companies by market cap, only Meta Platforms managed to end the week in positive territory. When these pillars stumble, it’s hard for the market to find its footing.
The Dow, S&P 500, and Nasdaq are all set to close the week with losses, worsened by a sharp decline on Friday. The once-favored Russell 2000 is looking at its worst week since March 2023. As expected, the Cboe Volatility Index (VIX), Wall Street’s “fear gauge,” surged past a critical threshold, hinting at its highest close since October 2022.
Impacting Earnings Reports
Aside from the tech giants, other significant earnings reports stumbled this week. Blue-chip pharma stocks like Merck and Pfizer experienced diverging paths post their quarterly updates. Moderna, a front-runner in the pandemic era, witnessed a decline amidst a competitive respiratory market landscape.
However, amidst the sea of setbacks, there were glimmers of hope. PayPal’s exceptional earnings performance sent its stock soaring, potentially injecting life into the struggling fintech sector. Additionally, Cloudflare’s upbeat report disrupted the cybersecurity industry following the CrowdStrike outage episode.
Stocks Worth Monitoring
Following the Fed’s recent decision, gold mining stocks garnered attention, particularly with the looming recession fears. Keep an eye on Uber Technologies’ EV ventures and Hims & Hers Health, which might spring a surprise with their impending earnings report.
Exploring New Stock Opportunities
Senior Quantitative Analyst Rocky White’s insights on a potential Dow pullback earlier in the week may prove prophetic. Investors are now left to navigate the aftermath as a fresh month unfolds. Certain retail stocks are poised for August, while options traders could lean towards a bearish stance on casino stock Wynn Resorts. For bargain hunters, two sub-$20 stocks may pique interest due to their significant declines.
