Nasdaq 100, Dow Jones, S&P 500 News: Tech Giants Bounce Back Amid Broad Market Rotation

U.S. Stocks Rebound as Market Sentiment Shifts

U.S. stocks rebounded on Friday, recovering from Thursday’s sharp sell-off. The S&P 500 climbed 0.8%, reclaiming the 5,600 level, while the Nasdaq Composite rose 1.1%. The Dow Jones Industrial Average added 209 points, or 0.5%.

Tech Stocks Lead Recovery

After Thursday’s significant drop, tech stocks led the market recovery. Nvidia, which fell 5.6% in the previous session, bounced back as investors returned to their favorite tech names. Apple also saw gains, contributing to the overall market uplift.

Sector Performance

The technology sector, despite recent volatility, remained a key driver of market performance. Financial stocks showed mixed results, with banks facing challenges from interest rate pressures. Industrial stocks gained traction, as evidenced by the Dow’s outperformance. Small-cap stocks, represented by the Russell 2000, demonstrated strong momentum, suggesting increased investor confidence in broader economic stability.

Bank Earnings Mixed

Major banks kicked off the second-quarter earnings season with mixed results. JPMorgan Chase reported higher-than-expected revenue, driven by a jump in investment banking fees. However, its shares fell 2%. Citigroup beat expectations but saw its stock dip 3%. Wells Fargo tumbled 7% after reporting disappointing net interest income.

Market Rotation Continues

The recent market action suggests a rotation from large-cap tech stocks to small-caps. The Russell 2000 Index, representing smaller companies, surged more than 6% for the week. This shift could persist, as historical data indicates such rotations often continue for about four weeks.

Inflation Concerns Persist

Despite recent signs of easing inflation, JPMorgan Chase CEO Jamie Dimon warned of ongoing inflationary pressures. He cited factors such as large fiscal deficits, infrastructure needs, and global remilitarization as potential drivers of higher inflation and interest rates.

Market Forecast

The short-term outlook appears cautiously bullish. The S&P 500 is up 0.9% for the week, having reached another record close on Wednesday. The Dow’s 1.3% weekly gain reflects investors’ shift towards industrial names. However, valuations have become stretched, and any changes in price trends or labor market conditions could significantly impact the market.

Traders should closely monitor upcoming earnings reports and economic data for further indications of market direction. The ongoing rotation from large-cap tech to small-caps may present opportunities in the coming weeks, but caution is advised given the potential for continued volatility.

Technical Analysis

After Thursday’s steep sell-off, the resilient S&P 500 Index is already hovering just below its record high of 5707.75. A trade through this level will signal a resumption of the uptrend.

The recent price action suggests 5621.25 is the new trigger point for an acceleration to the downside.