August Suffered Steep Setback but Weekly Gains Within Reach

The tech sector was on the mend this week, despite Fed hawkishness and rising bond yields

Much to investors’ surprise, stocks managed to string together several days’ worth of wins to close out the final trading week of August. A rebounding tech sector was the driving force behind much of this week’s surge for all three indexes, as well as a series of jobs and inflation data. By Tuesday the Dow Jones Industrial Average (DJI), Nasdaq Composite (IXIC), and S&P 500 Index (SPX) each logged a third-straight win, as tech continued to build amid falling bond yields. 

The last day of August saw weekly jobs data come in at 228,000, slightly below estimates. The core personal consumption expenditures (PCE) index — the Federal Reserve’s preferred inflation gauge — rose 0.2% month over month and 4.2% year on year. For August all three indexes saw steep losses — the IXIC marking its worst since December. Despite starting September on a shaky note, as of this writing all three benchmarks are pacing toward weekly wins.

Tech Stocks, AI Tailwinds

Tech stocks were once again the talk of the town, as investors cycled back into the sector despite some of the Fed’s more hawkish comments. Loop Capital praised Netflix (NFLX) stock’s price point, and said it could rally more than 20% in its bull note. Cloud concern Box (BOX) issued lackluster guidance, and expanded its stock buy program by $100 million. Blue-chip software firm Salesforce (CRM), meanwhile, saw its shares soar after the company beat second-quarter estimates and lifted its full-year forecast. 

Artificial Intelligence (AI) is increasingly making its mark in the tech realm, as well. Dell Technologies (DELL) saw its earnings results bolstered by the AI boom. Similarly, MongoDB (MDB) hinted at more AI integration in its latest earnings report. Finally, Oracle (ORCL) stock was upgraded on AI tailwinds, while Morgan Stanley downgraded Palantir Technologies (PLTR) on inflated expectations as the prime AI play.


Holiday-Shortened Week Ahead

The first full week of September will be short, as Wall Street is closed on Monday in observance of Labor Day; however, the Fed’s Beige book and a few earnings reports will be released next week. Meanwhile, Senior Quantitative Analyst Rocky White has highlights 16 stocks that boast attractive entry points, and Senior V.P. of Research Todd Salamone’s notes some breaks down last week’s volatility.

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