The stock market rally is in its most fragile state in months ahead of Wall Street's busiest week of the summer.as the indexes struggled to recover losses during a Friday rally. All three major averages closed the final full week of July lower. The S&P 500 was down more than 1%, while the Nasdaq fell over 2.3%.
Given this backdrop, whether unemployment holds steady or ticks up as it has for the past three months will be in particular focus.the pullback has made sense given the runup in Big Tech stocks over the past year and how overstretched positioning in many of the large tech stocks had become. This, combined with investors rotating into less-loved areas of the market rally that could benefit from the Fed cutting interest rates, has become the hallmark of the market action over the past two weeks.
And, to Lerner's point, stocks that miss on Wall Street estimates for earnings, revenue, or both are seeing significantly worse price reactions in the next trading day than typically seen over the past five years, according to research from Evercore ISI's Julian Emanuel.
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