Wall Street Rallies as Megacap Stocks Lead Recovery

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Wall Street Rallies as Megacap Stocks Lead Recovery

Loveworld / 5 hours

July 23, 2024

3 min read

Wall Street’s three major indexes closed higher on Monday, buoyed by a rebound in megacap growth stocks. The S&P 500 and Nasdaq Composite, which had suffered their worst weekly performance since April, showed signs of recovery, while the Dow Jones Industrial Average ended a two-session slump following its recent all-time closing high.
Market Movers

Megacap Stocks: Alphabet, Meta Platforms, and Tesla were notable gainers after a challenging week. These tech giants, which had significantly weighed on the market recently, saw a resurgence in their stock prices.
Nvidia: Shares of Nvidia rose following a Reuters report that the company is developing a version of its new flagship AI chips tailored for the Chinese market, complying with current U.S. export regulations.
Information Technology Sector: The Information Technology index led sectoral gains, breaking a four-day losing streak. This sector’s recovery highlights a renewed investor interest in technology stocks.

Market Sentiment and Presidential Race Impact

Rebound from Recent Selloff: “We think this move today probably has more to do with a rebound from the selling that occurred last week than anything else,” noted Jason Pride, Chief of Investment Strategy & Research at Glenmede.
Political Uncertainty: The recent announcement by U.S. President Joe Biden of his withdrawal from the presidential race and endorsement of Vice President Kamala Harris introduced new uncertainties. Analysts suggest that Biden’s exit might prompt investors to adjust trades related to anticipated fiscal and inflationary impacts from a potential Trump victory. Conversely, a possible divided government under a Harris administration might benefit the markets.
PredictIt Betting Trends: Online betting site PredictIt showed a shift in probabilities with Trump’s chance of victory decreasing by 4 cents to 60 cents, while Harris’s odds increased by 12 cents to 39 cents.

Sector-Specific Movements

Trump-Linked Stocks: Stocks associated with Trump showed mixed performance. Trump Media & Technology Group experienced a decline, while Phunware, a software firm, saw gains.
Quarterly Earnings Anticipation: Investor focus is also on upcoming quarterly earnings reports from major companies, including Alphabet and Tesla. These results will be critical in determining the sustainability of recent rallies in high-momentum stocks and whether there will be a shift towards underperforming sectors.
Rate Cut Expectations: “We’re seeing the market begin to price in a bit faster set of rate cuts, leading to a shift in leadership towards smaller-cap stocks and a move away from the largest tech companies,” commented Glenmede’s Pride.

Other Notable Moves

CrowdStrike: The cybersecurity firm’s stock fell further after a recent software update led to a global tech outage last Friday.
Delta Air Lines: Delta’s shares dropped following the cancellation of over 600 flights as it worked to resolve operational disruptions.
Verizon Communications: Verizon fell after reporting a revenue miss for the second quarter.
Mattel Inc: Mattel’s stock surged after Reuters reported that the toy maker had received an acquisition offer from buyout firm L Catterton.

Overall, the market’s rebound reflects a complex interplay of factors, including sector-specific developments and political uncertainties. As investors navigate these dynamics, upcoming earnings reports and further political developments will be closely watched.