Despite a Friday rally that provided some relief, it was another challenging week for the S&P 500 and Nasdaq as the rotation from market darlings to underperforming names continued. The Dow and small-cap Russell 2000 were the big winners, while the S&P 500 health care index led the upside by sector. On the downside, communication services, consumer discretionary, and information technology struggled.
Looking back on the week, there were some positive economic indicators, including a stronger-than-expected read on second-quarter U.S. economic growth and a largely inline June personal consumption expenditures price index. These numbers bolstered the case for three central bank interest rate cuts, starting in September.
In terms of earnings, there were mixed results. Life sciences company Danaher and industrial firm Dover posted positive results, while Ford disappointed with a nearly 20% stock drop for the week. Alphabet and Honeywell also saw post-earnings sell-offs, with Alphabet facing profit-taking despite a strong report and Honeywell revising its earnings outlook downward.
Looking ahead, the upcoming week is set to be another big one for earnings, with major companies like Procter & Gamble, Microsoft, Amazon, and Apple reporting. Economic reports on jobs will also be closely watched, with the July employment report on Friday carrying the most weight.
Overall, the market is eagerly awaiting the conclusion of the two-day July Fed meeting, with expectations for a cut in September. It’s a busy week ahead for traders and investors, with plenty of opportunities for market movement and volatility.
