Tech Falls as Earnings and Economic Data Disappoint

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Technology stocks took a hit last week, but the broader market still managed a fourth straight gain.

The S&P 500 rose 0.6 percent between Friday, July 20, and Friday, July 27. That contrasted with the Nasdaq-100’s decline of 0.7 percent. Sub-par earnings and economic data explained the mediocre performance.

Facebook (FB), as many clients probably know, was a stunner. Mark Zuckerberg’s company had its biggest drop ever and set a record by losing $119 billion of capitalization in a single session. Twitter (TWTR) had an especially bad showing as well. Both companies scared investors by shedding phantom accounts and warning of higher costs. A turning point for social media?

Gross domestic product was another disappointment despite growing at its quickest pace in almost four years. Optimists, hoping for something higher than 4.1 percent, were unimpressed by tepid business investment. Housing data and durable-goods orders last week also missed expectations. That cooled some enthusiasm toward the Trump economy.

Chart watchers may notice the S&P 500 stalled at the same price zone where it began a nasty selloff in February. Is the index hitting resistance at the same time news is getting less bullish?

S&P 500 with potential resistance level.

Turning to sectors, technology, housing and small caps fared the worst. Energy, financials and industrials had the strongest showing. Click here for our summary of quarterly earnings trends.

Hospital operator HCA (HCA) and fiber-optic supplier Corning (GLW) had the biggest gains in the S&P 500. Both ripped about 15 percent on strong results. Advanced Micro Devices (AMD) was close behind as the chip maker’s turnaround story continues.

Market-researcher Nielsen (NLSN) found itself at the bottom of the rankings, cratering 25 percent on weak revenue. TWTR, FB and flooring maker Mohawk Industries (MHK) were among the other big losers.

This week is just as busy for news and events, starting with Caterpillar (CAT) and Seagate Technology (STX) results this morning. Pending home sales are also due.

Tomorrow’s big event is Apple (AAPL) earnings after the closing bell. However European economic growth, U.S. personal income and spending and consumer confidence are also scheduled. Other big companies to issue results include Pfizer (PFE), Procter & Gamble (PG) and Baidu (BIDU).

Wednesday’s brings a Federal Reserve interest-rate decision, ADP’s private-sector payrolls report and the Institute for Supply Management’s manufacturing index, along with earnings from Tesla Motors (TSLA).

Initial jobless claims follow Thursday morning. Activision Blizzard (ATVI) and Teva Pharmaceutircals lead the earnings charge.

The week wraps up with non-farm payrolls Friday morning.

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David Russell is VP of Content Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.