Stocks fell at the end of a tumultuous week on Wall Street, with technology giants gearing up to release their earnings reports. The S&P 500 experienced its worst week since April, as investors engaged in a “rotation” strategy, shifting away from this year’s top performers towards underperforming stocks. This move was driven by expectations of a broader market rally as the Federal Reserve considers cutting rates.
The upcoming week is crucial for the stock market, with many megacap tech companies set to report their earnings. Glen Smith, of GDS Wealth Management, highlighted the importance of strong tech earnings and softening inflation in potentially reversing the recent market weakness and sparking a new uptrend.
Despite the overall market decline, small caps saw a rise of over 1.5% during the week. The tech sector, particularly chipmakers like Nvidia Corp. and Intel Corp., experienced significant losses. The Nasdaq 100 slid about 1%, while the Russell 2000 Index fell 0.6%.
Looking ahead, Tesla Inc. and Alphabet Inc. will be the first of the “Magnificent Seven” to report earnings next week. Analysts are eager to hear about Tesla’s progress with robotaxis and Google’s revenue boost from artificial intelligence.
While the market remains uncertain, there is optimism surrounding the potential for a turnaround in the stock market. Analysts predict that S&P 500 earnings may not be solely focused on technology for the first time since 2022, with expectations for a broader market growth.
Goldman Sachs Group Inc. strategists warn of a possible correction in the market this summer, citing weaker growth data and rising policy uncertainty. Investors have been pouring into US equities in anticipation of a Fed rate cut and a potential reelection of Donald Trump.
Overall, the stock market is facing a period of volatility and uncertainty, with key economic reports and earnings releases set to shape the trajectory of the market in the coming weeks.
