Next
week
could
give
investors
clarity
on
whether
the
“Magnificent
Seven”
stocks
can
still
power
the
market
higher,
or
if
they
should
instead
be
wary
of
the
pitfalls
of
a
top-heavy
market
now
that
some
megacaps
have
faltered.
Wall
Street
could
be
in
for
a
volatile
bout
of
trading
if
this
past
week
was
any
indication.
On
Friday,
the
tech-heavy
S
&
P
500
and
Nasdaq
Composite
ended
the
week
with
losses,
down
0.8%
and
2.1%,
respectively.
On
the
other
hand,
the
Dow
Jones
Industrial
Average
registered
a
winning
week,
up
0.8%.
The
Russell
2000
was
the
outperformer,
gaining
3.5%.
The
small-cap
index
is
now
higher
by
more
than
11%
this
year.
.SPX
5D
mountain
S
&
P
500
Those
moves
came
in
the
middle
of
lackluster
earnings
from
Google
parent
Alphabet
and
Tesla
that
drove
investors
to
dump
tech
stocks
in
favor
of
more
cyclical
assets.
Alphabet
shares
dropped
about
6%
this
week.
Tesla
shares
are
down
more
than
7%.
However,
the
bulk
of
Magnificent
Seven
results
is
set
for
release
in
the
week
ahead.
Microsoft
reports
Tuesday,
while
Facebook
parent
Meta
Platforms
releases
its
latest
quarterly
results
on
Wednesday.
Apple
and
Amazon
are
expected
to
post
earnings
Thursday. Nvidia
reports
in
late
August.
The
reports
could
clarify
what
is
in
store
for
the
stock
market
benchmarks
that
are
heavily
weighted
toward
technology,
at
a
time
when
investors
fear
that
the
artificial
intelligence
trade
has
gotten
ahead
of
itself.
For
investors,
more
disappointing
results
from
the
megacap
stocks
could
mean
further
downside
for
the
broader
market.
“The
number one question being asked by clients is: is this a correction or the start of
something bigger,”
Strategas
Securities’
Ryan
Grabinski
wrote
in
a
Thursday
note
referring
to
this
week’s
pullback.
“While my first instinct is to say that it is a
normal correction,
I
am
beginning
to
see
some
signs
of
concern.
First
off,
earnings
estimates
for
2H’24
are
seeing
revisions
lower
with
3Q
coming
down
1.4%
since
July
1st
and
4Q
coming
down
0.2%.”
“The bigger concern however is the waning ‘AI Enthusiasm,'”
Grabinksi
added.
“The circular capex cycle for
the
largest,
most
liquid
companies
does
not
appear
to
be
ending
just
yet,
but
investors
are
now
questioning
what
the
[return
on
investment]
will
be
in
the
future.”
As
it
is,
all
seven
of
the
Magnificent
Seven
companies
closed
out
the
week
with
losses.
The
fading
of
momentum
Even
as
the
tech
sell-off
has
investors
concerned
about
waning
momentum,
other
investors
say
the
megacap
names
continue
to
look
attractive.
John
Belton,
portfolio
manager
at
Gabelli
Fund,
said
it
is
important
to
view
the
Magnificent
Seven
on
a
case
by
case
basis.
In
fact,
he
noted
that
Tesla
and
Alphabet’s
earnings
results
this
week
should
be
differentiated,
as
the
former
was
a
case
of
poor
fundamentals,
while
the
latter
was
caught
up
in
a
market
rotation
away
from
tech,
he
said.
“I
do
think
bad
fundamentals
in
this
market
environment
are
going
to
get
really
punished.
Good
fundamentals
—
I
think
the
bar
is
just
higher
right
now
for
a
lot
of
these
tech
companies
in
this
earning
season,”
Belton
said.
“And
that’s
a
dynamic
that
is
not
necessarily
going
to
last
for
a
long
time,
but
that’s
sort
of
the
environment
we’re
in
right
now.”
For
the
moment,
Belton
said
he
is
finding
opportunities
in
other
parts
of
the
market
such
as
health
care,
industrials
and
financials.
But
he
still
remains
optimistic
on
the
long-term
outlook
for
AI.
“A
lot
of
these
companies,
the
fundamentals
are
just
still
really
good,”
Belton
said.
“And
I
think
so
long
as
the
fundamentals
remain
good,
and
[the]
earnings
growth
outlook
is
still
positive,
and
earnings
estimate
revisions
remain
in
a
positive
direction,
I
don’t
think
the
stocks
are
unreasonably
priced.”
FOMC
meeting,
July
jobs
report
Elsewhere,
investors
will
also
be
reviewing
the
latest
Federal
Reserve
interest
rate
decision
set
for
release
on
Wednesday.
Wall
Street
is
anticipating
the
central
bank
will
keep
its
benchmark
lending
rate
at
5.25%
to
5.50%,
but
investors
will
look
for
more
clarity
around
the
interest
rate
outlook
for
the
balance
of
the
year.
Markets
were
last
pricing
in
a
certain
rate
cut
in
September,
according
to
the
CME
FedWatch
Tool
.
Traders
will
also
get
insight
into
the
labor
market
next
week,
with
the
release
of
the
July
jobs
report
on
Friday.
Investors
have
been
carefully
watching
the
labor
market
for
signs
of
enough
cooling
to
justify
lower
rates,
but
not
so
much
weakening
that
the
economy
seems
headed
for
a
recession.
Economists
polled
by
FactSet
anticipate
the
U.S.
economy
to
have
added
177,500
jobs
last
month,
down
from
206,000
the
previous
month.
The
unemployment
rate
is
expected
to
have
held
steady
at
4.1%.
Week
ahead
calendar
All
times
ET.
Monday,
July
29
10:30
a.m.
Dallas
Fed
Index
(July)
Earnings:
On
Semiconductor
,
McDonald’s
Tuesday,
July
30
9
a.m.
FHFA
Home
Price
Index
(May)
9
a.m.
S
&
P/Case-Shiller
Home
Price
Indices
(May)
10
a.m.
Consumer
Confidence
(July)
10
a.m.
JOLTS
Job
Openings
(June)
Earnings:
Advanced
Micro
Devices
,
Live
Nation
Entertainment
,
Public
Storage
,
Electronic
Arts
,
Starbucks
,
Match
Group
,
Microsoft
,
First
Solar
,
Extra
Space
Storage
,
Caesars
Entertainment
,
Corning
,
Howmet
Aerospace
,
Procter
&
Gamble
,
Pfizer
,
Merck
&
Co.
,
Stanley
Black
&
Decker
,
PayPal
Wednesday,
July
31
8:15
a.m.
ADP
Employment
Survey
(July)
8:30
a.m.
Employment
Cost
Index
(ECI)
Civilian
Workers
(Q2)
9:45
a.m.
Chicago
PMI
(July)
10
a.m.
Pending
Home
Sales
Index
(June)
2
p.m.
FOMC
Meeting
2
p.m.
Fed
Funds
Target
Upper
Bound
Earnings:
MGM
Resorts
International
,
Allstate
,
Albemarle
,
Lam
Research
,
eBay
,
Qualcomm
,
Western
Digital
,
Meta
Platforms
,
Etsy
,
Norwegian
Cruise
Line
Holdings
,
Hess
,
Boeing
,
T-Mobile
,
Marriott
International
,
GE
Healthcare
Technologies
,
Generac
Holdings
,
Kraft
Heinz
,
Mastercard
,
Ingersoll
Rand
Thursday,
Aug.
1
8:30
a.m.
Continuing
Jobless
Claims
(07/20)
8:30
a.m.
Initial
Claims
(07/27)
8:30
a.m.
Unit
Labor
Costs
preliminary
(Q2)
8:30
a.m.
Productivity
SAAR
preliminary
(Q2)
9:45
a.m.
Markit
PMI
Manufacturing
(July)
10
a.m.
Construction
Spending
(June)
10
a.m.
ISM
Manufacturing
(July)
Earnings:
Apple
,
Clorox
,
Intel
,
Amazon.com
,
Booking
Holdings
,
Motorola
Solutions
,
Microchip
Technology
,
Kellanova
,
Hershey
,
Moderna
,
Air
Products
and
Chemicals
Friday,
Aug.
2
8:30
a.m.
Jobs
Report
(July)
10
a.m.
Durable
Orders
(June)
10
a.m.
Factory
Orders
(June)
Earnings:
Exxon
Mobil
,
Chevron
