U.S. Stocks Retreat Amid Tech Sell-off

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly/month performance 

4.    China/Hong Kong stocks weekly wrap 

5.    Singapore stocks weekly wrap 

6.   Major indexes weekly chart and technical support & resistance levels

U.S.

For the week of Nov 7, major U.S. stock indexes finished the week lower, as concerns regarding elevated valuations and increased scrutiny around artificial intelligence (AI) spending weighed on many of the growth-oriented stocks that have driven indexes’ rapid rise since early April. The technology-heavy Nasdaq Composite(COMP) led major indexes lower. The U.S. federal government shutdown reached the longest on record during the week, which also appeared to weigh on broader sentiment. Worries about the continuing lack of government data and the potential impact of the shutdown on gross domestic product growth also rose. Refer to below major indexes weekly performance.\

A snapshot of AI and Nvidia(NVDA):

Since ChatGPT’s release in late 2022, the Magnificent Seven have soared nearly 190%, lifting the S&P 500 by 75%, but also creating unprecedented market concentration. Today, the top 10 stocks account for over 40% of the S&P 500’s market capitalization. 

At the center of this rally is NVIDIA, the cornerstone of the AI ecosystem, which recently became the first company in history to surpass a $5 trillion market cap. For context, that’s

• Larger than five of the S&P 500’s 11 sectors;
• Equal to 60% of the entire Russell 2000 small-cap universe;
• Half the size of the STOXX 600, Europe’s large-cap benchmark; and
• Bigger than Germany’s GDP. 

Key highlights for the week and next:

1.    October layoffs highest in over 20 years. Private-sector released ADP’s October employment report on Wednesday. The private employers added 42k jobs during the month, rebounding after two consecutive months of declines. Meanwhile, a report released Thursday from consulting firm Challenger, Gray & Christmas indicated that employers have cut nearly 1.1 million jobs this year through October, a 65% increase over the same period last year and a 44% jump from the number of job cuts in the entirety of 2024. October’s 153,074 job cuts were the most for the month since 2003. 

2.    Recent volatility underscores the risks of historic market concentration, with the top 10 stocks now representing over 40% of the S&P 500’s market cap. Bubble concerns are emerging, but today’s tech leaders are profitable and cash-rich while the Fed is loosening its policy. 

3.    Services activity returns to growth; manufacturing shrinks for eighth month in a row. October ISM Services PMI registering a reading of 52.4% versus 50.0% in September. On the other hand, manufacturing activity contracted for the eighth consecutive month in October, with ISM’s Manufacturing PMI declining to 48.7% from September’s reading of 49.1%. 

4.    Consumer sentiment falls to lowest level since 2022. November Index of Consumer Sentiment reading dropped 3.3 points month over month to 50.3, the lowest since the index’s record low in June 2022

 

SPX sectors in play

Seven out of 11 SPX sectors recorded weekly gains. Energy(XLE) and Health Care(XLV) stocks led the gains while growth stocks lagged, including Technology(XLK), Communication Sevices(XLC) and Consumer Discretionary(XLY). The Tech(XLK) sector now 36% of the whole SPX, many sector indexes tested their 50 daily moving  average(DMA) on Friday and rebounded. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three major indexes declined this week. Both SPX and Nasdaq indexes tested 50dma and rebounded. The uptrend for all three major indexes have been intact so far. Watch closely their 50dma in coming week. Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland China stock markets edged higher for the week as easing U.S.-China trade tensions boosted risk appetite. The Shanghai Composite Index(SSE) rose 1.08% and the blue-chip CSI 300 added 0.82%. In Hong Kong, the benchmark Hang Seng Index advanced 1.29%. The latest weekly gain took the CSI 300 Index, the main onshore benchmark, to its highest level in nearly four years despite concerns about China’s growth outlook.

Key highlights for the week and outlook for China/HK:

Sentiment improved after the U.S. and China reached a one-year truce in their trade fight after the presidents of both countries met the prior week at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea. Longer term, prolonged strategic competition remains the underlying dynamic between the U.S. and China, which could play out in areas beyond trade.

Refer to below Hang Seng Index stocks’ weekly performance table.

Click below for SSE and .HSI weekly chart.

SSE weekly chart

.HSI weekly chart

 

Singapore

The Straits Times Index (STI) added 1.44% to close at 4492.24 this week, the STI index outperformed all major indexes in my table above, thanks to the two banks DBS and OCBC which are heavyweight index components, also SingTel- another heavyweight component stocks which is the top weekly performer with 8.94% gains. Refer to below STI index stocks’ weekly performance.

Click below for STI weekly chart.

STI weekly chart

Source: Some contents and data excerpted from various public market reports. Please comment to claim copyright ownership of any material, and I will remove it if necessary.