Stocks ended mostly lower today with the S&P 500 falling 0.24% and the Nasdaq down 0.67%, marking the fourth straight day of declines. The Dow was flat, while the Russell 2000 dipped 0.32%. Despite the red across major indexes, some areas of the market managed to hold up better.
The pressure came mostly from another selloff in Big Tech and AI-related names, which dragged down growth and momentum stocks. Popular retail names, investment banks, airlines, and cruise lines also struggled. On the flip side, sectors like utilities, healthcare, insurance, and discount retail posted gains, reflecting a rotation into more defensive or value-driven plays.
Retail earnings were in focus, with Target, Lowe’s, and TJX all reporting mixed results. Target disappointed some investors with its choice of new CEO, while TJX (owner of TJ Maxx) delivered strong performance and guidance. Lowe’s saw solid trends and made a big $8.8B acquisition to push deeper into the contractor space.
There were no major economic reports, but the Fed’s July meeting minutes were released, showing the central bank still sees inflation as the main risk. That said, the minutes were considered outdated, since they were written before last month’s weak jobs data. Investors are mostly waiting for Fed Chair Powell’s speech this Friday at Jackson Hole, which could give clues on future interest rate cuts.
Notable gainers included Guess (+26%) after agreeing to go private, Analog Devices (+6%) on strong earnings, and Hertz (+6%) after announcing it will start selling used cars on Amazon. Meanwhile, La-Z-Boy (-12%), James Hardie (-34%), and Alcon (-10%) were among the biggest losers on weak earnings or guidance.
Here’s Our Take
Today’s market action continued the trend of money shifting out of big tech and into value stocks, like healthcare and staples. While concerns about AI valuations and leadership changes at companies like Meta are putting pressure on the mega-cap names, the broader market isn’t falling apart - in fact, equal-weighted indexes are doing better, and some sectors like off-price retail and industrials are holding up nicely.
Retail earnings are showing a mixed but resilient consumer, while the Fed minutes confirmed inflation remains a concern, though their relevance is fading with more recent jobs data. Friday’s Jackson Hole speech by Fed Chair Powell is the real wildcard, and markets may remain choppy until then. For now, investors seem to be rotating, not retreating - suggesting a consolidation rather than a breakdown.
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