What a volatile week for equities. While the headlines may not show it, we had an up-and-down day in the stock market today. The SPDR S&P 500 ETF (NYSEARCA:SPY) fell 0.68% on Friday, but conflicting reports on trade had investors scratching their heads.
Last week, the markets crept lower each day, with the steepest decline occuring Wednesday, July 31, when the Federal Reserve cut interest rates.
On Monday, U.S. equities plunged as tensions flared between the U.S. and China. As tempers calmed, Wall Street staged a rebound.
The SPY finished the week relatively flat, with the PowerShares QQQ ETF (NASDAQ:QQQ) ending slightly higher and the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) ending slightly lower.
Clearly, it’s been an eventful week for investors. Let’s look at the Nasdaq Composite to get an idea of what to expect come Monday:
I love simple setups and it’s actually what we have when looking at the QQQ chart above.
We knew it was likely that the markets would struggle with the 50-day moving average, simply on account of how quickly it rallied from its lows.
While the ETF sold off on Friday, it held the 100-day moving average at its lows and bounced nicely on the day.
Now back toward the 50-day, this can go one of two ways.
Bears will look to gain control on a break below the 100-day moving average. Below it and $181 is on the table. Should shorts press it lower and break Monday’s low, the 200-day is possible.
On the upside, bulls could push the QQQ over the 50-day and reclaim the 20-day moving average. If that occurs, $192.50 to $195 is possible. Keep it simple: Over the 20-day is good for bulls, below the 100-day is good for bears.
Tough Week for Warren Buffett
It was a tough week for some of Warren Buffett’s top holdings at Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B). Buffett’s second-largest holding, Bank of America (NYSE:BAC), fell 3.1% over the past five days. His eighth-largest holding, JPMorgan (NYSE:JPM) sank 2.4%. Fifth-largest in Buffett’s portfolio, Wells Fargo (NYSE:WFC), dropped 2%. Buffett’s seventh-largest holding, meanwhile, U.S. Bancorp (NYSE:USB) slipped 4.6%.
Okay fine, so a number of bank stocks ended the week with only marginal losses, even though many were getting rocked at the start of the week. But none of it covers up the losses that Kraft Heinz (NYSE:KHC) and Teva Pharmaceuticals (NYSE:TEVA) logged. They dropped 17.2% and 10.6%, respectively.
At just ~$300 million, Teva isn’t that big of a position for Buffett. The flip side is that Berkshire has roughly the same number of shares as it did in the fourth quarter, according to the 13-F filings. With Teva down 55% on the year, this week’s losses only added insult to injury. KHC is a much bigger holding, at No. 6 in the portfolio. That’s despite the stock’s 38% drop in 2019 and 55% fall over the last 12 months.
Warren Buffett is still Warren Buffett, but he may want more than a Coke on Friday after the close.
Movers in the Stock Market Today
Yelp (NYSE:YELP) jumped over 5.5% on Friday after a better-than-expected earnings results. Shares are now teetering on an important level. Support is nearby, but a move back over Friday’s highs could trigger an even further rally. Although the company grew revenue just 5.1% year-over-year and slightly missed expectations, investors are feeling good after management reaffirmed guidance.
Yelp wasn’t the only one rallying Friday, but there were a lot of losers.
For starters, Dropbox (NASDAQ:DBX) fell more than 12.5% on the day and made new 52-week lows, albeit barely. The move comes despite the company beating on top- and bottom-line earnings estimates. The worry? Future growth.
A day after Lyft (NASDAQ:LYFT) beat estimates and kickstarted an 8% rally in Uber (NYSE:UBER), the latter is giving almost all of those gains on Friday, falling about 6% after reporting a quarterly loss of more than $5 billion.
Holy moly, how is that even possible? A lot of it is stock-based compensation from the IPO, but still, how can anyone feel good about a headline like that? Here are the must-hold levels for Uber stock.
While General Electric (NYSE:GE) didn’t report earnings on Friday, shares still slid lower by more than 3.5%. That’s now the stock’s seventh day of decline in eight trading sessions.
Interesting Mortgage Tidbit
With U.S. mortgage rates at their lowest level in three years, some economists are saying it won’t do much to help the housing market.
According to Issi Romem, senior director of housing and urban economics at Zillow, “It’s a bit of an added lease on life for this housing cycle. I don’t think it’s going to dramatically change anything.”
Even crazier though? Denmark citizens saw its rates for 20-year mortgages hit 0% this week. One bank even offered a negative interest rate of 50 basis points on 10-year mortgages.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.