Next Day Prep: Late-Day Tech Slide Signals Risk-Off Shift
A quick analysis of today’s market outlook and key trading opportunities to start your day.
Intro & Market Mood
A solid rebound day for the markets, with the S&P 500 up four-tenths and the Nasdaq climbing seven-tenths of a percent. Despite the broad strength that carried the day, a late-day fade in the technology sector raised concerns about underlying risk-off sentiment.
Overnight Headlines
- Tesla stood out with a more than four percent gain, erasing losses from the previous day.
- McDonald’s rallied over two percent despite an earnings miss, supported by strong same-store sales.
- Pinterest faced a tough day, plummeting almost twenty-two percent due to an earnings miss and cautious guidance.
Economic Announcements
Positive economic data, including a hotter-than-expected ADP employment report and expanding ISM Services PMIs with high prices paid, led to rising bond yields, suggesting a potential delay in rate cuts and impacting high-duration tech stocks.
Earnings Highlights
The market saw encouraging breadth as advancers outpaced decliners, and small caps like the Russell 2000 surged higher. However, late-day tech weakness and rising rates acted as headwinds, influencing market sentiment.
Top Movers
- IBM showed notable relative strength, closing near its highs and presenting a potential long opportunity around the 306 level.
- Ferguson (FERG) and Woodward (WWD) in the industrial sector exhibited strength, with clear entry points identified for potential upside moves.
- First Commonwealth Financial (FCFS) indicated a steady uptrend, offering a potential move towards higher price levels.
- For high-beta plays, Entera Bio (E-N-T-X) showed momentum potential but requires careful consideration due to size.
Quick Trade Ideas
Traders should focus on relative strength and quality industrial and tech names that demonstrated resilience against market weakness, such as IBM, FERG, WWD, and FCFS. Additionally, closely monitor high-beta opportunities like Entera Bio (E-N-T-X) for potential momentum plays.
Key Takeaway
Respect the late-day market weakness while identifying and following pockets of clear relative strength. Names like IBM, FERG, and WWD that closed strong could lead potential market rebounds and offer actionable trade opportunities.