Wall Street Week in Review: Stocks Notch Highs Despite Pessimism

Investor Sentiment Remains Bearish

The S&P 500 Index is up 12.5% year-to-date, 17% over the past six months, and is at an all-time high. In fact, small caps, large caps, and tech stocks are all hovering near all-time highs. However, the one item not near new highs is investor sentiment. Despite the stellar market performance and uptrend in price, the number of bearish market participants outweighs the number of bullish participants. According to the American Association of Individual Investors (AAII) Sentiment Survey, bears are at 49.5%, neutral stance is at 22.5%, and bulls make up just 28% of those surveyed.

Despite perceived high stock valuations, tariff fears, inflation worries, and geopolitical uncertainty, the market is currently illustrating how it climbs the proverbial “wall of worry.”

Market Breadth is Robust

As mentioned, the major market indices are all hovering near all-time highs. Nevertheless, one of the key bear arguments over the past few months is that only a handful of big tech stocks such as Nvidia (NVDA) or Broadcom (AVGO) are responsible for the gains. However, if investors take a deeper look “beneath the hood” of the market, they will discover that actual market breadth is a lot wider than Wall Street perceives. For instance, the NYSE New High-New Low indicator shows that the number of new highs has outweighed the number of new lows for every day in August and September thus far.

Stocks in the News

Below are some of the stocks that made headlines on Wall Street this week:

·       Oracle (ORCL): The cloud and software giant soared 35% after it announced that its contract backlog had swelled to $455 million. Read more about Oracle here.

·       Tesla (TSLA): Tesla shares rose after the chairman said CEO Elon Musk is done with politics and is fully focused on the company. Read more about Tesla here.

·       OpenDoor (OPEN): OPEN shares catapulted~80% Thursday after the company announced a new CEO and a new investment. Read more about OpenDoor here.

·       Robinhood (HOOD): HOOD shares jumped after the company was added to the S&P 500 Index. Robinhood CEO Vlad Tenev also announced several new products. Read more about Robinhood here.

·       Nebius (NBIS): NBIS shares exploded by 50% after the company landed a $17 billion data center deal with Microsoft (MSFT).

What to Watch on Wall Street Next Week

On Wednesday, Fed Chair Jerome Powell will announce the FOMC’s interest-rate decision. Markets are pricing in a high likelihood of a quarter-point cut. In addition, the monthly options expiration is next Friday.

Bottom Line

It was a busy week on Wall Street marked by Oracle earnings, and a slew of individual news items. Looking ahead, all eyes will be on the Fed’s interest-rate decision next Wednesday.

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This article originally published on Zacks Investment Research (zacks.com).

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