The S&P 500 has fallen below its 200-day moving average as more than half of its components breached this key technical level. Despite finishing just above the 200-day moving average on Thursday, the index slid back below it on Friday, reflecting broader market challenges. A number of major stocks, including members of the so-called “Magnificent 7,” are now trading below this technical level.
The iShares MSCI USA Momentum Factor ETF is also poised for its first close below its 200-day moving average since 2023, as previously high-performing stocks search for stability. In broader market movements, U.S. stocks rebounded from significant losses on Friday, managing to end the week with gains. The S&P 500 rallied 0.6%, the Nasdaq 100 gained 0.7%, and the Russell 2000 rose 0.4%, all recovering from deficits of more than 1%.
Financials were the worst-performing sector, while utilities, energy, tech, and industrials led the day’s gains. Walgreens Boots Alliance saw significant gains, while shares of several retail giants experienced dramatic swings. Costco in particular faced a sharp decline, falling over 6.5% on Friday following a disappointing fiscal second-quarter earnings report.
This marks its worst day since March 8, 2024, although the stock had risen 41% in the period between earnings reports.
S&P 500 dips amid mixed performances
Broader concerns over U.S. tariffs on Mexico and Canada also weighed on the retail sector.
In positive news, Bank of America increased its price target for Broadcom, thanks to a growing list of hyperscaler customers. Analysts at BofA, led by Vivek Arya, boosted their earnings per share forecasts for Broadcom for the current year and the next two, raising the price target to $260 from $250. This suggests a potential upside of about 35% for the shares.
“AVGO’s outperformance comes as a refreshing change after more contentious EPS calls from peers,” Arya & Co wrote. They anticipate that customized advanced chips (ASICs) will capture a 10-15% share in a $400-$500 billion long-term addressable opportunity. Broadcom’s ability to attract significant new customers strengthens their confidence in the company’s future prospects.
Most analysts share a positive outlook on Broadcom, with an average price target of $253. According to Bloomberg, 90% of analysts covering the stock rate it a buy, while 10% suggest holding. As the S&P 500 dips below its 200-day moving average amidst market volatility, individual stocks show mixed performances.
While the market grapples with technical breakdowns and earnings misses, some sectors, particularly advanced chip manufacturers like Broadcom, present a more optimistic outlook.