- Stocks enter the week with five consecutive days of losing the S & P 500 Index (SPX)
- Volatility flags slightly after a three-week high at the end of last week
- Tomorrow’s CPI data is expected to help provide direction
September has a bad reputation around Wall Street. As long as last week was the worst of three months, it’s alive until then, but after Friday’s irregularities, eyes turned to the tech department, and this morning some green sprouts pierced a crack in the sidewalk. I did.
Stocks enter the week with a five-day skid, as investors value historically high ratings and the potential of the more hawkish Fed. Another factor is the increased caseloading of Covid’s Delta variant. This is because many analysts are rethinking US economic growth calculations. Two of the largest companies by market capitalization, Apple (AAPL) and Alphabet (GOOGL), were weighed down on Friday with bad news (see below).
However, government data show that in the last few days, the average number of cases per day has begun to decline. It seems to have brought some hope to overnight trading as the major indices revived after some early undirected behavior. The pre-market rebound was accompanied by a decline in volatility after a three-week high at the end of last week.
It’s been a good recovery this morning, but I watched this movie several times last week. Things started hot and soon became cold. The question is whether the market can win follow-through purchases after the first 30 minutes or so.
September gained a bad reputation so far
Looking back on last week’s performance, it’s just a bright red sea. The S & P 500 sector, which has risen in the last five sessions, was consumer discretion, up only 0.22% of the 11 sectors.Performance in large circulation sectors such as finance, industry and materials was worst, but overall S & P500 Index (SPX) decreased by almost 1%.
Friday’s stumbling block threw a wet blanket at what was heading for the weekend as sales picked up towards the end. It is possible that some negative notes about the market as a whole from major investment banks were a factor.
One idea is that there has been no big sale for a long time, raising concerns that the market may be for sale. The counter-argument, despite recent weaknesses, continues to say that US stocks are one of the better games in town compared to other potential investments. For example, if inflation is as high as it is now, fixed income investments will lose value at current yields.
All this sale is obviously as investors are worried, Cboe Volatility Index (VIX) made a big profit in the second half of the Friday session and ended over 20 for the first time in almost a month. VIX hasn’t been able to sustain more than 20 profits for a very long time recently (see chart), but over 20 days show that investors are really worried about future turmoil. There is a possibility.
It certainly didn’t help that most of the so-called “megacap” stocks, such as AAPL, GOOGL, and Microsoft (MSFT), were ousted on Friday due to the expiration of the old week. Such stocks are so important in SPX that the market often catches a cold when sneezing.
Apple soft spot
According to the New York Times, the sneeze appeared to reflect investors’ disappointment with the decision of a US federal judge. It has the potential to boost app sales and the $ 100 billion online market. “
The judge’s decision was part of a proceeding between AAPL and Epic Games, a privately held company that turned popular games into Fortnite and sued AAPL over App Store policies last year. This decision seems like a big setback for AAPL, which relies on revenue from the App Store to make a profit. Shares fell more than 3% on Friday, the worst performance in a few months, nearly $ 10 below recent highs.
The AAPL stock rolled with other megacaps during the summer and helped send SPX to a series of highs. Friday was just one day, not a trend, but it’s important to monitor the performance of these giants to figure out where the SPX is going.
Even if AAPL’s share price falls, Match Group (MTCH), Spotify (SPOT) and Zynga (ZNGA) shares will all rise on Friday, perhaps to some extent from the ruling that they can hold more money instead of paying. Gained traction. It’s very important to AAPL when a customer comes across a product on the iPhone. It’s a good lesson for investors that when one company is hit by a news event, another can benefit. You just need to know the incoming landscape.
GOOGL was also clipped in the news on Friday. Probably due to concerns that this decision may affect the online store.
Apple Events, Inflation Data, Weekly Highlights Retail Sales
Tomorrow, the company will host an event announced by media reports that it may announce the iPhone 13 and Apple Watch 7, which could add more news to AAPL. The launch of the iPhone 12 last year was considered a huge success by many analysts. However, the mid-October launch event wasn’t a hit on Wall Street, at least not immediately.
AAPL’s share actually plummeted shortly after the event on October 13th and did not recover to pre-event levels for about a month. It wasn’t until late November that AAPL stocks began to rebound. Probably because it became clear that the product was a hit by then. It could be Lesson 2 today: Don’t let the product launch announcement and all the hype around it overwhelm you with inventory. It’s like President Reagan once said to Soviet leader Gorbachev, “Trust but verify.”
This week isn’t just AAPL. Tomorrow’s August Consumer Price Index (CPI) could be just around the corner in AAPL when it comes to headline drawing power. Last August’s Producer Price Index (PPI) was slightly above Wall Street’s consensus expectations, but the core PPI to remove food and energy was in line with analysts’ estimates. However, year-over-year growth in PPI reached a record high. That wasn’t necessarily what bullish investors wanted to hear, and it may have added to Friday’s selling pressure.
For the CPI, according to Briefing.com, the consensus estimate is 0.4% headline monthly growth and 0.3% core growth, according to research firm Briefing.com. This is down from the 0.5% growth in the previous headline, but is the same as the 0.3% core growth seen in July. Anything far beyond the estimate could catch the eye from Wall Street and raise concerns that the Fed may have to become more hawkish (see below).
The retail sales and Friday’s first September sentiment report from the University of Michigan, scheduled for this Thursday, are also probably noteworthy, and we’ll discuss them further as the week progresses.
Washington worries: The Beltway drama is just one of many that is approaching the market as the week begins. At Capitol Hill, there was debate over an extension of the US debt cap, and Treasury Secretary Janet Yellen warned last week. The time to decide on an infrastructure bill is approaching. When…