In the near term, the market could remain highly sensitive to weaknesses of economic data and corporate results as it remains in a consolidation mode. Unless there are unexpectedly strong reports from US economy & companies, broader index like Dow Jones & S&P500 may not rise too much or make new record highs. NASDAQ may be stronger as tech stocks benefit from strength of AI theme or tariff exemption news like the Apple. Still, at above 21,000, NASDAQ rally is stretched and even good news from AI may not lift it much higher and hence it may have limited support to the overall market.
Before end-August Nvidia’s quarterly report (27th Aug), the mighty but top-heavy NASDAQ may only partially offset non-tech weakness that S&P500 could stage a mild correction of 3-5%. If AI keep pushing new high, Magnificent Seven may reduce the correction magnitude & duration to around only 3% for days instead of weeks. Even if it avoids a meaningful correction, a consolidation is needed and likely this month.
