The stock market rally diverged last week, with small caps rising strongly and a large number of buying opportunities emerging from a variety of sectors. The Nasdaq tumbled below its 50-day line, though the S&P 500 regained that level on Friday.
The small-cap Russell 2000 popped 3.5% last week, near recent multiyear highs.
Tesla (TSLA) and Google-parent Alphabet (GOOGL) tumbled on earnings, while the CEOs of Google and Meta Platforms voiced concerns that tech companies might be spending too much on artificial intelligence. That slammed Nvidia (NVDA).
So Apple, Microsoft, Meta Platforms and Amazon signals about AI capital spending and monetization will be huge this coming week.
Apple, Microsoft, Meta and Amazon each had a tough week, with only Apple stock above its 50-day line. They aren’t broken yet, but need some repair work.
The Federal Reserve meeting is on July 30-31, with markets expecting policymakers to leave rates steady.
The market has fully priced in at least a quarter-point rate cut in late September, and see at least two and perhaps three cuts this year as likely.
So if Powell doesn’t give a clear green light for rate cuts on Wednesday, financial markets could react poorly.
Tech is temporally out of vogue and although Nazzy caught an oversold bounce on Friday, it looks weak.
Huge earnings this week and they will probably set the direction for tech near term.