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Good morning. It is a quiet Monday for data after a rough week for tech, and the big test comes midweek when SpaceX, Meta and Tesla report.
The Market Gauge
Stocks ended last week on a sour note. On Friday the S&P 500 fell 1.09% to 7,659.44, the Nasdaq composite dropped 2.14% to 26,140.03 and the Dow slipped 0.34% to 52,002.41. For the week, the Nasdaq lost 4.5%, its worst week since the end of June, and the S&P 500 gave up 1.95%, while the Dow managed a 0.7% gain.
The selling hit AI and software stocks hardest. Worries about how AI spending gets paid for, and whether demand holds up, sent chip and data-center names lower, and big software winners such as CrowdStrike, Palo Alto Networks and Cloudflare fell 17% to 18% for the week. Money moved toward consumer, medical, insurance and energy stocks instead. U.S. crude oil jumped 10.4% for the week to $101.41 a barrel, and the 10-year Treasury yield fell to about 5.1%.
Investor's Business Daily's read: the S&P 500 and Nasdaq both broke below their 50-day moving averages, the small-cap Russell 2000 fell below its 200-day line, and breakouts are failing. IBD says this is a time to raise cash, keep only long-term winners or small positions in defensive areas, and keep building watchlists.
Beginner note: The 50-day moving average is the average closing price of the last 50 sessions, drawn as a line on the chart. Big investors watch it as a support level, so when an index closes below it, the uptrend is under real pressure, not just having one bad day.
On today's calendar
No major economic reports today. The New York Fed's calendar shows nothing scheduled for Monday, so prices will move on news, earnings and follow-through from last week.
Tuesday, 8:30 AM ET: Housing starts. The government's monthly count of new homes that builders started. It shows how the housing market is holding up with interest rates this high.
Tuesday after the close: SpaceX results. SpaceX reports its third quarter, with a webcast at 4:30 PM ET. Investors will look at its spending plans and whether it turns an adjusted profit.
Wednesday after the close: Meta and Tesla results. Meta's call is at 4:30 PM ET and Tesla's webcast at 5:30 PM ET. Meta's plans for AI spending next year matter for the whole AI group, because that spending is someone else's revenue.
On the radar: Williams-Sonoma
$WSM ( ▲ 2.95% ) Williams-Sonoma sells kitchenware and home furniture through its own stores and websites, including the Pottery Barn and West Elm brands. It is one of the consumer stocks that held up while tech sold off.
On Friday the stock touched 255.33, a new 52-week high, which took it briefly above the 254.89 buy point of a saucer-like base that IBD flagged. It could not hold there. It closed at 250.16, down 0.44% on the day and about 1.9% below that buy point. Volume was about 66% above its normal level. IBD gives it a 98 Composite Rating out of 99, and its next earnings report is expected around Nov. 18.
Why it's worth watching: A breakout counts when the stock closes above the buy point on strong volume, not when it pokes above it for a few minutes. Williams-Sonoma did the poke, then pulled back, on a day the market was falling. When the major indexes are below their 50-day lines, even good setups fail more often, so this is a stock for the watchlist, not a reason to rush in.
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ONE FOR THE ROAD
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Educational content only. Not financial advice. Past performance does not predict future results. Read the full financial disclosure.
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