Stock Market Today: Mega-Cap Tech Rallies to Drag Markets Higher

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published July 22, 2024

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Karee Venema

Stocks rebounded sharply from their worst week since April as market participants shrugged off political drama in the U.S. and scooped up risk assets with both fists.

The sort of leadership folks have come to expect from this bull market was back in full force on Monday, as mega-cap tech did much of the heavy lifting. The usual suspects of the Magnificent 7 stocks were the leaders, once again.

The Nasdaq-100, an index of the 100 largest non-financial companies in the Nasdaq Composite, popped 1.5%, boosted by Magnificent 7 stocks such as Tesla (TSLA, +5.2%), Nvidia (NVDA, +4.8%), Alphabet (GOOGL, +2.3%) and Meta Platforms (META, +2.2%). Naturally, the S&P 500's tech sector followed suit, gaining 2.3%.

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"The market is taking in a surprise new Democratic presidential ticket, a mountain of earnings, and fresh inflation data," writes the markets team at Argus Research. "Given the switch to Kamala Harris from Joe Biden, the markets are recalibrating the odds of who might win the top seat in the country. On earnings, about 25% of S&P 500 companies report this week. The Fed's favorite inflation data is due on Friday."

At the closing bell, the tech-heavy Nasdaq Composite added 1.6% to 18,007, while the broader S&P 500 rose 1.1% to 5,564. Disappointing quarterly earnings from a blue-chip component helped the Dow Jones Industrial Average lag the other benchmarks, gaining 0.3% to 40,415.

Earnings, econ data on tap

Much of Monday's momentum may have come in anticipation of this week's earnings calendar, which is packed with potentially market-moving names.

Alphabet (GOOGL) is one of the first Magnificent 7 stocks making an appearance on the earnings calendar, with the Google parent set to release its second-quarter earnings report after Tuesday's close.

CFRA Research analyst Angelo Zino (Buy) says Wall Street will be watching for updates on "margin expansion, artificial intelligence (AI) momentum, and growth trends across the company's three core segments (Cloud, Search, and YouTube)."

Zino believes "cloud growth could surprise to the upside," with the analyst forecasting a 25% year-over-year (YoY) increase in both Q2 and Q3. He also expects the report to show that digital ad trends remained healthy over the three-month period.

Tesla, Visa (V), Coca-Cola (KO) and United Parcel Service (UPS) are just a smattering of blue chips also scheduled to report quarterly results.

Meanwhile, this week's economic calendar includes the initial reading on second-quarter gross domestic product (GDP). After the U.S. economy grew at a respectable 1.3% pace in Q1, second-quarter GDP is likely to run about 2.0%, writes Kiplinger economist David Payne in his GDP outlook.

The main event on the economic calendar is Friday's release of the Personal Consumption and Expenditures (PCE) Price Index. The data, which tracks consumer spending, follows recent reports showing that inflation is starting to ease back to a level the Federal Reserve is comfortable with. This, in turn, has lifted expectations the central bank could start cutting interest rates as soon as September.

Verizon weighs on Dow

Verizon Communications (VZ), the only telecom among all 30 Dow Jones stocks, had a very bad Monday. VZ shares tumbled 6% to help keep a lid on the price-weighted Dow's gains.

Although Verizon's second-quarter adjusted earnings per share (EPS) matched Wall Street's average estimate, revenue came up short. Disappointing metrics around customer additions and losses likewise spooked the Street.

Verizon stock is now back to levels last seen in January and is trailing the S&P 500 by wide margins over the past three-, five-, 10-, 15- and 20-year periods. Analysts aren't particularly bullish as a group on VZ beating the broader market over the next 12 months or so, either.

Of the 27 analysts covering VZ surveyed by S&P Global Market Intelligence, seven rate it at Strong Buy, eight say Buy and 12 call it a Hold. That works out to a consensus recommendation of Buy, with mixed conviction.

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Dan Burrows is Kiplinger's senior investing writer, having joined the publication full time in 2016.

A long-time financial journalist, Dan is a veteran of MarketWatch, CBS MoneyWatch, SmartMoney, InvestorPlace, DailyFinance and other tier 1 national publications. He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among many other outlets. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about markets and macroeconomics.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade individual stocks or securities. He is eternally long the U.S equity market, primarily through tax-advantaged accounts.

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