Summary:
US major stock indexes dropped Friday; Treasury yields fell amid weak earnings, interest rate uncertainties, and geopolitical tensions.
US major stock indexes mostly closed sharply lower on Friday and Treasury yields dipped as investors juggled lackluster earnings, uncertainties surrounding interest rates and geopolitical tensions.
The relatively tech-light Dow was the sole gainer while the Nasdaq 100 shed nearly 2%. The S&P 500 and the Dow registered their steepest weekly percentage losses since Mar 2023.
Grave concerns about spillover in the Middle East appeared to plateau after Tehran downplayed Israel's retaliatory drone strike, a move that seemed geared toward averting regional escalation.
Exposure to stocks is now so high that any weakness is likely to set off a bigger slump once investors start to cut back on their long positions, according to top Wall Street strategists.
Apple, Microsoft, Nvidia and the rest of their megacap cohorts are gearing up for what is expected to be one of the more eventful earnings seasons. The S&P 500's forward PE ratio is around 20 times.
Generative AI will no doubt be top of mind as the push to monetize the technology continues and investors look for any indication that those billions of dollars in investments are starting to pay off.
An upbeat corporate earnings season can hardly drive equities higher as much of the optimism is already priced in following the record-breaking rally this year, according to JPMorgan Chase.
The benchmark index is facing considerable selling pressures due to still overstretched valuations of the AI-related companies. A close below 4,950 will expose the next support around 4,850.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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