Evidence of Sector Rotation
Technology giants Microsoft and Alphabet traded marginally lower, with AI darling Nvidia slipping about 3%. This pullback led a broader decline in chip stocks including Broadcom, Qualcomm, and AMD, signaling a potential shift in investor sentiment towards the tech sector.
First Half Recap
The first half of 2024 saw strong gains, with the S&P 500 up 14.5% and the Nasdaq Composite rallying 18.1%, driven by AI enthusiasm. The Dow lagged, adding 3.8% due to second-quarter weakness. For Q2, the S&P and Nasdaq gained 3.9% and 8.3% respectively, while the Dow lost 1.7%. The Nasdaq’s performance marked its third consecutive positive quarter, a feat not seen since 2021.
Sector Performance
As of the latest trading session, sector performance showed significant divergence:
- Utilities led gains, up 0.74%, suggesting a defensive tilt among some investors.
- Energy and Financials both rose over 0.65%, potentially benefiting from economic recovery expectations.
- Consumer Discretionary stocks gained 0.62%, indicating continued consumer confidence.
- Technology, despite its strong first-half performance, dipped 0.2%, reflecting the ongoing rotation.
- Industrials and Real Estate sectors showed weakness, down 0.22% and 0.12% respectively.
Economic Data in Focus
Investors await manufacturing PMI numbers and Friday’s June jobs report for insights into labor market conditions. These data points could influence expectations for Federal Reserve interest rate cuts. Kevin Philip, partner at Bel Air Investment Advisors, noted, “This is one of those times we have seen before where ‘good news is good news, and bad news is good news’ for US stocks.”
