Technology stocks are still falling as investors wait for big news events like inflation and the Federal Reserve.
The Nasdaq-100 shed 5.9 percent of its value in the holiday-shortened period between Friday, August 30, and Friday, September 6. It was the biggest weekly drop since late 2022. Semiconductors, which have led the market this year, had their worst week since the pandemic in March 2020.
The adage, “buy the rumor, sell the news,” seemed to explain last week’s volatility. Investors spent much of the last 12-18 months buying stocks like Nvidia (NVDA) and Broadcom (AVGO), looking for AI to drive growth. Then, when the growth arrived in the form of strong quarterly results — as it has in recent weeks — traders sold the news.
The economic data also hurt sentiment. Non-farm payrolls increased less than expected for the second straight month and manufacturing activity shrank more than projected. That raised worries of slowing economic growth. However, not all the numbers were bad. Services surprised to the upside and jobless claims were lower than feared. Unemployment also declined.
Buyers on Strike?
Another reason for the weakness is that buyers see little reason to put money to work right now. They’re not sure how aggressively the Fed will cut interest rates at its next meeting on September 18. There’s uncertainty about the November 5 Presidential election and coming tech products like Apple’s (AAPL) expected iPhone and NVDA’s Blackwell chip.
In addition, the S&P 500 has risen in eight of the last nine months. That kind of environment seems to be making buyers wait for greater clarity. (See below for more on potential catalysts.)
Aside from the selloff in technology, energy stocks were the second-worst performers last week. Crude-oil futures (@CL) hit their lowest level since February and gasoline (@RB) slid to prices last seen in April 2023. Worries about U.S. and Chinese demand, plus more supply expected from OPEC+, are hammering the sector.
| Biggest Decliners in the S&P 500 Last Week | |
| Dollar Tree (DLTR) | -21% |
| Broadcom (AVGO) | -16% |
| Albemarle (ALB) | -15% |
| Intel (INTC) | -14% |
| KLA (KLAC) | -14% |
Dollar Tree (DLTR) had its biggest weekly drop in over a decade after earnings, revenue and guidance missed. The discount retailer is the third-worst performer in the S&P 500 this year, trailing only Walgreens Boots (WBA) and Intel (INTC).
AVGO tumbled after guidance failed to impress investors. It could also be a victim of “sell the news” after tripling between May 2023 and mid-June.
Safe Havens Shine
The main asset groups that went up last week were safe havens like bonds, consumer staples and real-estate investment trusts.
MarketAxess (MKTX) had the biggest gain in the S&P 500. The fixed-income exchange for institutional investors climbed on strong August trading volumes.
All told, just 18 percent of the index’s members rose last week, according to TradeStation data.
Interestingly, the relative strength in safe havens extends over a longer period. For example, real estate and utilities have risen the most in the last three months while technology and energy have fallen the most. That may reflect weakening risk appetite overall.
Charting the Market
Last week’s pullback returned the S&P 500 to 5,400, a potentially important level from mid-June. It’s also near a 50 percent retracement of August’s big range. Below this price area, traders may see risk of probing toward last month’s low around 5119.
The price action is also potentially different than the pullback in April and May. At that time, stocks surpassed their previous weekly high. This time, they failed below the old peak. That could give buyers another reason to wait — especially with a big election two months away.
Currencies could also be a risk because the Bank of Japan plans to hike interest rates as central bankers in the U.S. and Europe prepare to cut. That could potentially lift the yen against other currencies, which sometimes increases volatility.
The Week Ahead
This week brings important news on technology, inflation and politics. However, they may have limited immediate impact.
| Biggest Gainers in the S&P 500 Last Week | |
| MarketAxess (MKTX) | +6% |
| Insulet (PODD) | +5.9% |
| American Tower (AMT) | +5.4% |
| AT&T (T) | +5.4% |
| SBA Communications (SBAC) | +5.2% |
AAPL’s product event, widely expected to feature a new iPhone with AI capabilities, is scheduled for 1 p.m. ET, today.
Donald Trump and Kamala Harris have a Presidential Debate on Tuesday evening.
Wednesday morning features the consumer price index (CPI) plus crude-oil inventories. CPI may impact sentiment because it’s the first inflation report for August.
Thursday brings the producer price index (PPI) and initial jobless claims, plus earnings from Kroger (KR) and Adobe (ADBE).
Consumer sentiment is on Friday morning.
