Wall Street Rebounds as Investors Eye Tech Earnings Amid Political Uncertainty

On Monday, all three major Wall Street benchmarks closed higher as investors returned to megacap growth stocks, helping the S&P 500 and Nasdaq Composite recover from their worst weekly performance since April. The Dow Jones Industrial Average also turned positive, ending a two-session decline since its all-time high last Wednesday. The second quarter earnings season is expected to heavily influence tech's trajectory in the coming weeks.

Optimism about a potential Federal Reserve rate cut in September drove investors towards sectors likely to benefit from economic recovery. However, political uncertainty increased after President Joe Biden announced he would not seek reelection and endorsed Vice President Kamala Harris as the Democratic nominee. Recent polls showed Donald Trump leading, although Harris's nomination could impact this trend. Stocks linked to Trump had mixed results, with Trump Media & Technology Group down 0.8% and Phunware up 4%.

Megacap stocks such as Alphabet, Meta Platforms, and Tesla saw gains between 2.2% and 5.1% after being major drags the previous week. The Information Technology index climbed 2%, breaking a four-day losing streak.

Nvidia rose 4.8% after reports that it was developing a version of its AI chips for the Chinese market that would comply with U.S. export controls. This boost in Nvidia helped lift the broader tech sector.

Verizon Communications fell 6% after its second-quarter revenue missed estimates, despite adding more wireless subscribers than expected. CrowdStrike Holdings dropped 14% as several firms downgraded the cybersecurity company following a software update that caused widespread outages.

BlackRock analysts remain optimistic about technology stocks despite recent volatility, emphasizing long-term trends like AI over short-term economic data. They believe tech will continue to drive market returns, viewing any pullbacks as buying opportunities.

Investors are closely watching the upcoming earnings reports from Alphabet and Tesla. Alphabet's report will highlight AI benefits and spending, while Tesla's will focus on its response to declining demand and progress in AI-driven technologies. Tesla's CEO, Elon Musk, also announced that humanoid robots would be deployed internally next year. Other major companies reporting include Visa, Coca-Cola, Texas Instruments, Lockheed Martin, General Electric, UPS, and Freeport-McMoran.

Data for Technical Analysis (1H) CFD US30 DJIA

Resistance : 40408.4, 40414.3, 40423.9

Support : 40389.2, 40383.3, 40373.7                      

1H Outlook

Source: TradingView                     

Buy/Long 1 If the support at the price range 40339.2 - 40389.2 is touched, but the support at 40389.2 cannot be broken, the TP may be set around 40411.0 and the SL around 40314.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 40408.4 - 40458.4, TP may be set around 40475.0 and SL around 40364.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 40408.4 - 40458.4 is touched, but the resistance at 40408.4 cannot be broken, the TP may be set around 40385.9 and the SL around 40483.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 40339.2 - 40389.2, TP may be set around 40307.0 and SL around 40433.0, or up to the risk appetite.       

Pivot Points Jul 23, 2024 01:27AM GMT

Sources: Investing 1, Investing 2