Stock markets bounced back quickly and on strong volume after the August 5, 2024 sell-off. That day, Japan’s Nikkei fell to a percentage size not seen since the U.S. Black Monday stock crash in 1987. Last week, stock markets closed with the best weekly gain for the year. It reversed the early August sell-off.
Walmart (WMT) posted quarterly earnings that showed the market’s recessionary fears were misguided. The Walmart CFO said that monthly performance in Q2 was fairly consistent. Most importantly, business levels in July did not worsen.
Investors may consider buying Walmart (WMT) and Costco (COST). However, Target (TGT) and Macy’s (M) are likely to underperform.
Last Friday, economic data showed that building permits fell by 0.1% M/M to 938,000. Weak homebuilder confidence may pressure D.R. Horton (DHI), which trades near a yearly high. Lennar (LEN) shares may pull back in the coming months if home sales weaken.
Technical Signals
Stock indices are at a crossroads. It broke above the 50-day moving average on strong volume. To confirm a buy signal, the index must not fall below the 200-day moving average. With modest inflation reports and steady job growth reports, the index is not likely to fall by that much.
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