Dow Jones, Nasdaq, S&P 500 weekly preview: BTIG sees 'meaningful' downside risk for tech stocks
S&P 500 (SPX) closed lower for the second consecutive week as analysts continue to highlight rich valuation and a near-term risk of a market correction. The index fell 0.3% to test the initial support at 4450.
Tech-heavy Nasdaq Composite Index (IXIC) dropped 1.9% after previously losing 2.85% in the first week of August. The index is now approaching key near-term support near 13000.
«Technology is up ~35% on the year, yet its medium-term momentum continues to rollover as many key ETFs have broken significant volume-based support levels. We see meaningful downside risk for tech broadly over the coming weeks,» BTIG technical analysts wrote in a note.
On the other hand, the Dow Jones Industrial Average (DJI) rose 0.6% as it continues to hover around 52-week highs. Although the DJI was testing the resistance around 35600, the bulls weren’t able to secure a weekly close near these levels.
Last week’s highlight was the CPI report for July, which saw a year-over-year increase of 3.2%, slightly lower than expectations. The core CPI was reported at 4.7%, also below estimates. Both measures experienced a monthly uptick of 0.2%.
The main contributor to the monthly inflation rise was shelter costs, which climbed by 0.4%, resulting in a 7.7% increase compared to the previous year. Adjusted for inflation, real wages saw a 0.3% monthly increase and a 1.1% year-over-year rise.
“While it would be fair to describe prices as still relatively high in places such as shelter and used cars, we are witnessing a rate of change that is encouraging to consumers, as well as to Federal Reserve policymakers,” said Rick Rieder, chief investment officer of global fixed income at asset management giant BlackRock (NYSE:BLK).
For this week, the highlights
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