The S&P 500’s (SPY) tentative rally to all-time highs is outshining China’s CSI 300 Index at multi-year lows. Again, markets benefited from the technology stock strength. Just as AMD (AMD) and PayPal (PYPL) attracted the most trading yesterday, it will do so again today. Potentially hurt by stretched valuations, AMD stock might fall as profit-takers lock their gains.
On the index, most of the technology stocks traded at new highs on Monday. Alphabet (GOOG), Applied Materials (AMAT), Salesforce (CRM), Palo Alto (PANW), Western Digital (WDC), Micron (MU), Akamai (AKAM), Arista (ANET), and Broadcom (AVGO) are the stocks that could move big again today.
Left behind in this historic rally are the small caps. Expect the ETF (IWM) to show volatility today. The sector has the greatest burden of higher borrowing costs from rising rates. Inflation hurts demand, weakening revenue for small companies. Their bottom line shrinks, raising the risk of bankruptcy.
Super Micro Computer (SMCI) is the top holding on the Russell 2000 ETF. The supercomputer firm soared last week after raising its dividend. Watch out for selling pressure on AI-related stocks, which would hurt small caps. In addition, Rambus (RMBS) and Onto Innovation (ONTO) are also tech stocks in the top holdings on IWM. Any weakness in tech stocks would hurt those firms, too.
Tourism cruise ship firm Carnival (CCL) potentially peaked at over $19 last month. It risks breaking below the 50-day and 200-day simple moving average after that.
