Traders on the trading floor of the New York Stock Exchange, United States Source: Bloomberg
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US stocks end in green as chipmaker rebounds
“Nvidia” lost its first place soon after losing more than $220 billion of its market value in two days last week. As a consequence of ringing the bell on other bets in the market. They lost $220 billion for ringing a bell on four numbers influenced on foreign governments trying to pull a game on other investors. Everyone realized, and investors took their money out of the company same as they are doing with the other top companies.
The market relies on big technology stocks
It was the market’s last attempt to go up without relying on a group stocks short-term major gains, as a group of indicators show continued weakness in market breadth, which enhances uncertainty about the continued strength of the rise. The divergence between the performance of the S&P 500 and its breadth has reached one of the worst levels in three decades, according to Bloomberg Intelligence.
“At the end of the day, the market is still too reliant on big tech stocks,” said David Bahnsen of Bahnsen Group. “Excessive investor sentiment, euphoria, and exaggerated momentum always end up the same way whether the volatility that tech stocks experienced last week “It is the beginning of something deeper or not, or whether this decline will continue or not.”
The S&P 500 index moved near the 5480 level. FedEx Corp stock rose 15% thanks to bullish expectations and stock buyback plans. The KBW banking index fell ahead of the results of the Federal Reserve’s annual stress tests. Micron Technology announces its business results after the market closes.
10-year Treasury yields rose to 4.3%. An auction of five-year bonds worth $70 billion showed signs of good demand. The dollar recorded its highest levels since November. The yen’s decline to its lowest levels since 1986 increases expectations of intervention.
“Regret the missed opportunity”
“There are warning signs lit in the market as we head into the hot summer months,” said Craig Johnson of Piper Sandler. “Investors in big tech stocks are driven by ‘fear of missing out’, while investors in the rest of the market are driven by ‘regret’.” Despite missing the opportunity) as the overall market breadth remains weak outside of a few mega-cap stocks.”
The S&P 500 index is heading for a strong positive performance for the first six months of the year, supported by rising prices of the largest stocks in the market. By dividing the index shares into fixed segments according to market capitalization: the larger the stock, the better its performance, according to Jack Ablin of Cresset.
“Much of the variance is attributable to the higher interest rate environment for a longer period,” Ablin explained. “Investors believe that giant technology companies – thanks to their ability to generate cash – are less reliant on borrowing, and that companies that need to borrow have much easier access to capital than… Its smaller counterparts. So, where are the markets headed in the second half of 2024?
Ablin expects the market’s bullish momentum to expand later this year as focus shifts to the possibility of interest rate cuts.
“This means that high-quality companies, especially those with sustained growth in their dividends, are likely to continue to lead their lower-quality peers in an increasingly constrained borrowing environment,” he added.
New leadership?
The Bloomberg Intelligence Sector Rotation Model suggests that the time has come for new leadership to emerge, and favors the energy, healthcare and financial sectors as the sectors best supporting the index’s leadership in the second half.
“Technology and the tech-related telecom sector have the strongest price momentum, but declining earnings dominance and high relative multiples have relegated both groups to the bottom of our rankings,” wrote Bloomberg Intelligence strategists led by Gina Martin Adams.
For his part, Mark Haefele, from UBS Global Wealth Management, says that although NVIDIA’s fluctuations have led market trends, the structural investment case for artificial intelligence remains in place in terms of positive adoption of intelligence. Artificial monetization trends. Hevel also takes a constructive view on market expansion amid strong fundamentals.
He added: “We maintain our positive view on the AI story, but we believe that adjusting the size of exposure to the technology sector is key to weathering volatility while maintaining strategic exposure to technology that we believe is poised to drive growth in the coming years.”
Second quarter earnings prospects
For the second-quarter earnings season, the Big 7 are still expected to account for the bulk of growth in the S&P 500 overall, according to Ryan Grabinski of Strategas.
He explained, “What remains encouraging for us is the improvement in estimates for the remaining 493 companies starting from the third quarter, with growth rates for both the top of the market and the rest of the market returning to normal,” and “If this expansion bears fruit, it will be an encouraging sign of the sustainability of the bull market.”
The S&P 500 index is heading to enter the second half, achieving gains of about 15% since the beginning of the year. July is also the strongest month in the index’s performance throughout the year since its launch, and over the past two decades, according to data collected by the Bespoke Investment Group.
“What’s even more interesting is that, given the outperformance over the past 20 years, July’s outperformance was the eye of the storm,” Bespoke noted. “July falls between June, August and September, which all rank as the three worst months of the year.” , with average decreases of 0.17%, 0.10%, and 0.7%, respectively.”
Performance of the most important indicators:
- The S&P 500 rose 0.2% at 4 p.m. New York time
- The Nasdaq 100 index rose 0.3%.
- The Bloomberg Dollar Spot Index rose 0.4%.
- The price of Bitcoin fell by 1.5% to $60,968.31
- The value of Ether settled at $3,408.48
- The price of gold in spot transactions fell 0.9% to $2,298.61 per ounce
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