The U.S. stock market has picked up where it left off last week.
Investors and traders are selling technology. Today as of 2:30 p.m. New York the big disappointers from last week are down heavily. Twitter (TWTRWealth Strength IndexTWTR is Extremely Flat and trending Down) is lower by 7.63%, Netflix (NFLXWealth Strength IndexNFLX is Extremely Down and trending Down) is down 4.91%, and Facebook (FBWealth Strength IndexFB is Extremely Flat and trending Up) has lost 3.65%. But traders and investors are selling pretty much everything in the sector, no matter what earnings results a company announced last week. Microsoft (MSFTWealth Strength IndexMSFT is Extremely Flat and trending Up) has moved 1.86% lower; Alphabet (GOOG) is down 1.3%, and Amazon (AMZNWealth Strength IndexAMZN is Moderately Flat and trending Up) has retreated 2.09%.
The Technology Select Sector SPDR ETF (XLK)) is down 1.43% and the technology-heavy NASDAQ Composite has dropped for a third day in a row. Right now the index–at 7650–is testing support at the 50-day moving average at 7650.046.
The market action reflects a consensus judgment that the technology sector is played out after having led the rally in recent months.
What’s needed is for some other sector to step up to, first, support prices, and second, to lead the major indexes higher. The energy sector is trying with the Energy Select Sector SPDR ETF (XLE) up 1.06% but I’m not sure that the sector can provide sustained leadership. The move up today is too news related, based as it is on reports that the Syncrude plant in Canada’s oil sands region will be off line even longer than expected in reports of unexpected delays two weeks ago and that the Saudis are suspending oil shipments through a key Red Sea strait in response to an attack by Iranian-backed Houthi rebels in Yemen on tankers last week. So far no other exporters have followed the Saudi lead but you can understand why the oil markets are nervous today–shutting down the Red Sea route would halt shipment of about 4.8 millions barrels of oil a day to Europe and the United States. As of 2:30 p.m. New York time today U.S. benchmark West Texas Intermediate crude was up 2.21% to $70.21 a barrel and international benchmark Brent crude was higher by 1.09% to $75.10 a barrel.
The problem for the market, of course, is that energy prices that are up on news can turn down on news just as quickly.
The other sector that has provided leadership recently, the financials, doesn’t seem likely to step up to a leadership role ahead of the two day meeting of the Federal Reserve that begins on July 31 and ends of August 1. Financials–and the market as a whole–are nervously waiting hints from the Fed about the likelihood of interest rate increases at the central bank’s September and December meeting.
The Financial Select Sector SPDR ETF (XLF) is up 0.33% today as it marks time ahead of that meeting.
The market indexes are down but holding relatively steady in the face of technology weakness. The Standard & Poor’s 500 index is down 0.42% and the Dow Jones Industrial Average is off 0.33%.
The next big technology sector news will be Apple’s earnings report after the market close tomorrow, Tuesday. Tesla (TSLAWealth Strength IndexTSLA is Extremely Up and trending Up) reports on Wednesday, August 1.