Stock Market Update Wednesday July 24, 2024 Equities experienced a significant sell-off, with the S&P 500 declining 2.3%, terminating the broad market index's 356-session streak without a 2% drop. The tech-heavy Nasdaq 100 suffered a steeper decline of 3.6%, while the Roundhill Magnificent Seven ETF plummeted 6.1%.
Away From Stocks: Treasury yield curve steepened considerably, with the two-year yield reaching 4.37% and the long bond yield reaching 4.54%, resulting in a 17-basis point spread, the widest in over two years. WTI crude oil prices stabilized at $77.50 per barrel, gold retreated from early gains to close at $2,398 per ounce, bitcoin remained relatively unchanged at $65,800, and the VIX volatility index surged over three points to 18, nearing its year-to-date high from April.
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Tesla's Q2 earnings release yesterday evening failed to meet market expectations, despite considerable fanfare surrounding its robotaxi and AI initiatives, the company was unable to offset the underwhelming performance of its core automotive segment. Notably, the market reacted with a significant 10% decline in Tesla's share price today. Additionally, Google experienced a 4% dip in its stock value, despite ostensibly "winning" the AI race, largely attributed to investor concerns over the company's substantial investments in AI with minimal tangible returns thus far.
This morning's macroeconomic data release, including the S&P's Purchasing Managers' Index (PMI) and new home sales figures, indicated weaker-than-expected economic activity. This triggered a substantial market downturn, with the S&P 500 experiencing a nearly 2% decline by midday and the Nasdaq Composite dropping almost 3%. However, the SPY ETF, tracking the S&P 500, has reached a technical support level (as illustrated by the blue line), and our algorithmic buy alert issued on May 6th remains valid for now.
The QQQ ETF signaled a sell on July 19, prompting caution against additional accumulation of both the QQQ ETF and technology stocks at this time. Today, the blue line was breached, making the weekly close a crucial metric to monitor closely.
Our proprietary algorithm generated a buy signal on July 11th, confirming the current uptrend remains robust with a bull flag formation underway. Absent a sell alert, we maintain a bullish stance on small-cap stocks. With a potential rate cut anticipated in September, we foresee substantial upside potential ahead in the IWM ETF.
Despite the equity market's downturn today, the cryptocurrency market is demonstrating resilience, with Bitcoin and several altcoins posting gains. Bitcoin briefly breached the $67,000 threshold before retracing to $66,000, potentially influenced by the news of Bitstamp creditors receiving Bitcoin payouts on Thursday. Ethereum (ETH) experienced more headwinds compared to Bitcoin amidst the successful launch of spot ETF trading, currently hovering around $3,400. Meanwhile, Solana (SOL) briefly surpassed the $180 mark before retracing slightly below this level again.
