Disappointing reports from Alphabet and Tesla sent the market reeling
It’s the tech sector’s world, we’re all just living in it.
-Chart of the Week, April 26
That quote from April referenced Big Tech's ability to carry the stocks higher, even if market conditions were suboptimal. This week, investors got a taste of the opposite. While dovish Fed rhetoric propped up Wall Street earlier in the week, lackluster earnings reports from Microsoft (MSFT), Amazon.com (AMZN), and Apple (AAPL) halted stock market momentum. The sudden pivot was exacerbated by manufacturing data on Thursday that seemed to imply a forthcoming recession, and that the Fed was a step slow in cutting interest rates.
That general market malaise was then compounded even more by disappointing jobs data on Friday. Of the top six stocks in market cap, only Meta Platforms (META) finished in the black for the week. It's hard for the stock market to gain any footing when the anchors flounder like that.
At the time of this writing, the Dow, S&P 500, and Nasdaq are all on track for weekly losses, due in part to Friday's nosedive. The small cap Russell 2000 (RUT), just a week ago the darling of Wall Street, is headed for their worst week since March 2023. And to the surprise of no one, Wall Street's "fear gauge," the Cboe Volatility Index (VIX), barreled past a key level and is eyeing its highest close since October 2022, .
Earnings Reports of Note
Beyond Big Tech, there were several notable earnings reports that dropped the ball. Blue-chip pharma stocks Merck (MRK) and Pfizer (PFE) moved in opposite directions after their respective quarterly reports. Vaccine stock Moderna (MRNA) looks to be a pandemic flash in the pan, gapping lower amid a crowded respiratory market.
It wasn't all losers, though. An earnings triple play sent PayPal (PYPL) soaring, and could help prop up the struggling fintech sector. In the wake of the CrowdStrike outage drama, Cloudflare's (NET) encouraging report shakes up the cybersecurity sector.
Add These Names to Your Watch List
The Fed's decision on Wednesday put gold mining stocks in focus, and safe haven assets certainly become more intriguing when staring down a recession. Keep an eye on Uber Technologies' (UBER) forays into electric vehicles (EV), while Hims & Hers Health (HIMS) may be the a sneaky earnings report to watch next week.
New Month, New Stocks to Target
Senior Quantitative Analyst Rocky White was quite prescient on Tuesday with his Indicator of the Week assessing the chances of a Dow pullback. Investors will try to pick up the pieces heading into a new month. One retail stock is ready for August, while options traders may want to skew bearishly toward casino stock Wynn Resorts (WYNN). And if you're picking through the bargain bin, these two stocks under $20 caught our eye for their drastic drawdowns.