Down Days
Now that’s a selloff.
Unless you’re short and/or a permabear, days like Wednesday are no fun.But they happen, just not very much at all lately, and they are essential elements in the complex processes that are bull markets.
I say that with the benefit of about 15 minutes of post-close perspective and on the basis of a whole lot of stock market history.
Your comfort level right now is probably a function of your confidence in your long-term plan.
Now is an opportunity/reminder to review yours if you haven’t in a while and to establish one if you haven’t already.
After all, there’s no question “BTFD” has been an effective strategy in the post-pandemic era.
And, with the S&P 500 now down 4.24 percent from an all-time closing high set just six trading days and 14 news cycles ago, as the great Eddy Elfenbein framed it, we’re surely talking about a dip.
Tesla $TSLA and Alphabet $GOOGL turned red in Tuesday’s post-market due in large part to questions about AI initiatives raised by their second-quarter reports and slid another 12.33 percent and 5.04 percent, respectively on Wednesday.
TSLA is also showing something of an Elon discount, with many of the EV automaker’s operational issues traceable to the mercurial CEO’s ever-changing dreams and moods.
And Nvidia $NVDA, the poster stock for the AI revolution, was down 6.80 percent and has now lost about $640 billion in market capitalization since reaching a new all-time high on June 20.
It’s the first time in 356 days the S&P has closed down more than 2 percent.
The combination of “bad” earnings and seasonal weakness plus a genuinely strange series of market and political anomalies seems to have investors, traders, and speculators on an edge they went over yesterday.
Perhaps Bill Dudley saying the Federal Reserve risks recession by not cutting its benchmark interest rate next week also shook some confidence in the macro situation and the prospects for forward earnings growth.
It’s fair to say a rate-cut announcement after the Federal Open Market Committee concludes on July 31 is likely to induce a negative reaction.
Today is a new day. Of course we’d be silly not to observe the follow-up price action but data compiled by Jason Goepfort of SentimenTrader shows it’s unlikely to devolve into a serious bear market.
Fresh catalysts include second-quarter GDP and weekly jobless claims data, out at 8:30 a.m. ET, and earnings reports from 726 of the 1,960 companies scheduled to report this week.
Semiconductor maker STMicroelectronics $STM will share results and guidance before the open, and Deckers Outdoor $DECK will do the same after the close.
There’s nothing as dramatic as a Magnificent Seven earnings report or two dropping, so those representatives will have to do.
We will see Microsoft’s $MSFT and Meta’s $META earnings on Tuesday, July 30. Amazon.com $AMZN will report next Wednesday, July 31. Apple $AAPL is up on Thursday, August 1.
Nvidia won’t close this chapter of The Magnificent Seven story until August 28.
So how significant is Friday’s Personal Consumption Price Index report anymore…