U.S. equities mostly finished lower on Monday as volatility continues to ramp up, led by deepening weakness in big-cap tech stocks. Known as the “FAANGs,” these were the stocks that have captivated the attention of investors in recent months for their seemingly relentless upward momentum.
But after some disappointing results/guidance from Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) last week, profit taking is becoming concerned selling. AMZN closed below the $1,000-a-share level and lost its 50-day moving average for the first time since the beginning of July. Looking at downside volume activity, this is the most serious pullback for the e-commerce giant since November.
In the end, the Dow Jones Industrial Average bucked the trend to gain 0.3%, the S&P 500 Index lost 0.1%, the Nasdaq Composite lost 0.4% and the Russell 2000 lost 0.3%. Treasury bonds were little changed, the dollar extended its recent weakness, gold lost 0.1% and crude oil reversed early weakness to finish 0.9% higher.
Click to Enlarge Breadth was slightly positive at 1.1 to 1 on the New York Stock Exchange, with heavy volume clocking in at 126% of the 30-day average. Financials led the way with a 0.6% gain while materials were the laggards, down 0.8%. GoPro Inc (NASDAQ:GPRO) gained 1.7% on an upgrade from Morgan Stanley citing valuation tailwinds and the new QuikStories software upgrade.
Hertz Global Holdings, Inc (NYSE:HTZ) lost 21% after being downgraded to underweight from equal-weight at Barclays on concerns investors are ignoring the challenges to earnings ahead.
Tesla Inc (NASDAQ:TSLA) fell 3.5% after the Model 3 sedan achieved initial deliveries last week. However, Tesla CEO Elon Musk said the company would be in “production hell” for at least six months as it tries to ramp output rate.
On the economic front, June pending home sales gained 1.5% month-over-month beating the consensus estimate of 1.0%.
Conclusion
Looking in the rear view, the action over the last few sessions feels like a definitive break from the trends of July as a whole. The Nasdaq gained 3.5% for its best month since February. And it’s gained in 11 of the last 13 months. Big tech stocks jumped 10% for their best month since October 2015.
Click to Enlarge But the Dow Transports fell 3.5% for the worst month since Brexit in June 2016 on concerns about weak economic data. The U.S. dollar continues to careen lower, hitting the lowest levels since 2014 and suffering its worst month since January and its longest losing streak since 2011.
Keep an eye on the dollar, as rising currency market volatility is poised to spill over into other asset classes amid a historic lack of downside movement in the stock market.
The dollar’s decline is being motivated by the political gridlock in Washington as well as ongoing disappointment with U.S. economic data.
Check out Serge Berger’s Trade of the Day for Aug. 1.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
Tell us what you think about this article! Drop us an email at editor@investorplace.com, chat with us on Twitter at @InvestorPlace or comment on the post on Facebook. Read more about our comments policy here.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
