Big tech companies experienced a setback in late U.S. trading due to Micron Technology Inc.’s disappointing outlook that did not meet investors’ high expectations. This fueled uncertainty about the sustainability of the recent stock market rally, particularly as other chipmakers, such as Nvidia Corp., were also negatively impacted. Additionally, after the Federal Reserve announced that the largest U.S. banks had passed the stress test, paving the way for higher shareholder payments, the market faced further uncertainties.
Despite the recent attempt to push against mega-cap stocks, market breadth remained weak, with the S&P 500 performance showing a significant divergence. The rise in the S&P 500 was driven by a select few large companies, such as Amazon.com Inc., which reached a $2 trillion valuation. However, factors like the high 10-year Treasury yields and the strengthening dollar indicated potential challenges ahead.
As investors grappled with contrasting sentiments, technology indices were experiencing FOMO, while the rest of the market faced ROMO as market breadth remained narrow. The S&P 500’s performance in the first half of the year showcased the dominance of big-cap stocks, driven by the interest rate environment. Despite this, analysts believed that U.S. stock markets could see a broadening later in the year as rates potentially declined.
Amidst ongoing sector rotations, energy, healthcare, and financials emerged as favored sectors for the second half of the year, according to Bloomberg Intelligence’s model. The “Magnificent Seven” mega-cap stocks were expected to continue driving growth in the S&P 500, but estimates hinted at an improvement for the remaining stocks in the third quarter.
Moving forward, market analysts anticipated July to be a crucial month, historically characterized by strong market performance. However, as July falls between months with average drops, the market looked ahead with a mixture of caution and optimism. Corporate highlights included notable profit rises for companies like Jefferies Financial Group Inc., along with developments like Whirlpool Corp.’s potential acquisition bid and ongoing challenges for companies like Moderna Inc. and General Mills Inc.
Key events in the upcoming week included reports on China industrial profits and Eurozone economic confidence, as well as data releases on U.S. GDP and inflation. Cryptocurrencies, bond yields, commodities, and stock movements exhibited mixed trends, reflecting the market’s ongoing uncertainties. This summary highlights the complex landscape of financial markets and the various factors influencing investor sentiment and market dynamics.
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https://finance.yahoo.com/news/stocks-churn-broadening-big-tech-155334877.html
