Stocks Test Support as Blue Chips Take Leadership From Big Tech


Stocks are testing support as the venerable Dow Jones Industrial Average takes leadership from newer technology companies.

The 138-year-old benchmark rose 0.7 percent between Friday, August 4, and Friday, August 11. The Nasdaq-100, on the other hand, fell 1.4 percent. It was the third time in the last four weeks that the Dow outperformed the Nasdaq (which is exactly a century younger).

The moves represent a shift from the March-July period, when the Nasdaq surged 31 percent. Artificial intelligence and cost savings fueled that trend, while more recent buying has focused on older industries like health care, machinery and energy.

The consumer price index was probably the biggest news event last week. It showed inflationary pressures continuing to ease as predicted. Producer prices and initial jobless claims rose more than forecast. The headlines did little to impact expectations about Federal Reserve policy.

Biggest Gainers in the S&P 500 Last Week
Eli Lilly (LLY)+18%
Axon Enterprise (AXON)+17%
Akamai Technologies (AKAM)+13%
Broadridge Financial (BR)+10%
Valero Energy (VLO)+10%
Source: TradeStation Data

Energy Jumps

Energy was the top-performing sector again as crude-oil futures (@CL) hit a nine-month high. Tight inventories, reduced production and growing demand have fueled the move.

Healthcare took the No. 2 spot after results and guidance propelled Eli Lilly (LLY) to record highs and its biggest weekly gain ever. The pharma giant cited strong demand for its Mounjaro diabetes treatment and the potential approval of its donanemab Alzheimer’s drug this year.

Axon Enterprise (AXON), which provides Tasers and police-monitoring software, jumped after earnings and revenue beat estimates. Similar news lifted Akamai Technologies (AKAM) to a new 52-week high.

Utilities and real-estate investment trusts climbed slightly last week. Both lagged the market in the first half. Industrials continued to outperform as well.

Semiconductors, the top-performing group in the first half, led to the downside last week. Chinese technology stocks and software makers also fell.

S&P 500, daily chart, with select levels and indicators.

Charting the Market

The S&P 500 slipped 0.3 percent, its second consecutive negative week. The index tried to rally on Thursday, but hit resistance near the July 27 low of 4528. It then probed and bounced at 4450, the high between mid-June and mid-July. Could old resistance become new support? That could suggest its uptrend remains intact — especially if prices remain above the 50-day moving average.

Wilder’s Relative Strength Index (RSI) fell to its lowest reading since early May. Chart watchers may consider that a sign it’s no longer overbought.

Biggest Decliners in the S&P 500 Last Week
International Flavors & Fragrances (IFF)-20%
Tapestry (TPR)-17%
Insulet (PODD)-14%
Sealed Air (SEE)-14%
Nvidia (NVDA)-8.6%
Source: TradeStation Data

The Week Ahead

This week brings a mix of economic news and more earnings.

Nothing important is scheduled for today.

Retail sales and NAHB’s homebuilder sentiment index are due tomorrow, along with results from Home Depot (HD).

Wednesday brings housing starts, building permits and crude-oil inventories. Attention could also focus on minutes from the last Fed meeting at 2 p.m. ET. Cisco Systems (CSCO) and Target (TGT) report earnings.

Thursday features initial jobless claims. Walmart (WMT) and Applied Materials (AMAT) issue quarterly numbers.

Deere (DE) and Estee Lauder (EL) report on Friday morning.

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