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Weekly Market Recap: Tech Sell-Off, Earnings Reports, and Economic Insights Thumbnail

Weekly Market Recap: Tech Sell-Off, Earnings Reports, and Economic Insights

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Market Overview

U.S. equities experienced volatility this week, with earnings reports and economic data shaping market movements. The S&P 500 fell by 0.8%, and the Nasdaq dropped by 2.1%, largely due to a global tech sell-off. The Dow Jones fared better, gaining 0.8%, while the Russell 2000 index of small-cap stocks rose 3.2%. Political developments, such as President Joe Biden exiting the 2024 race and endorsing Vice President Kamala Harris, also influenced market sentiment. Earnings from major tech firms like Tesla and Alphabet failed to meet investor expectations, contributing to a midweek decline. However, stronger-than-expected GDP growth and a favorable PCE inflation report provided a late-week boost, leading to a broad rally. 

In Europe, earnings season drove market activity, with the STOXX 600 index ending the week 0.6% higher. LVMH's weak sales and LSEG's lower earnings forecasts were notable drags, while U.S. inflation data helped lift European stocks. In Asia, tech stocks led to declines in Japan, South Korea, and China, with the latter also impacted by unexpected rate cuts from the People's Bank of China. India reached record highs despite budget concerns, while Taiwan and Australia saw mixed results due to external pressures like typhoon Gaemi. 


Federal Reserve Insights and Economic Roundup

Fixed income markets saw the Bloomberg U.S. Aggregate Index advance as Treasury yields mostly fell. The 10-year yield dropped slightly, and the two-year yield decreased by six basis points. Economic data suggested cooling rather than collapsing conditions, with notable curve steepening. The yield curve remains inverted but is closer to normalization levels. Commodities faced pressure, with the Bloomberg Commodities Index down 1.4%. WTI crude futures declined for the third consecutive week, while gold, silver, and copper also saw losses. The U.S. dollar remained stable, influenced by robust GDP data and jobless claims. 

Economic Highlights: 

  • Goods inflation decreased by 0.17% in June, while services prices rose 0.20%. 
  • Q2 GDP growth was 2.8%, driven by inventory rebuilding and increased government spending. 
  • Housing activity remained below pre-COVID levels, with existing home sales falling to near-term lows. 

The Week Ahead

Key economic data releases for the upcoming week include: 

Monday: Dallas Fed Manufacturing Activity (July) 

Tuesday: FHFA House Price Index (May), S&P CoreLogic Case-Shiller Home Price Index (May), JOLTS Job Openings (June), Conference Board Consumer Confidence (July) 

Wednesday: MBA Mortgage Applications (July 26), ADP Employment Change (July), Employment Cost Index (Q2), Pending Home Sales (June), FOMC Rate Decision (July 31), Bank of Japan Rate Decision 

Thursday: Challenger Job Cuts (July), Nonfarm Productivity (Q2 preliminary), Unit Labor Costs (Q2 preliminary), Initial Jobless Claims (July 27), ISM Manufacturing (July), Construction Spending (June) 

Friday: Change in Nonfarm Payrolls (July), Unemployment Rate (July), Average Hourly Earnings (July), Factory Orders (June), Durable Goods Orders (June final)