Week of 07/22-07/26 Tech Slides, Market Sell-Off Continues

Market indexes experienced the worst one-day drop since 2022 on Wednesday and extended their losses on Thursday. Tech earnings were the main catalysts for this sell-off as Alphabet (GOOG) and Tesla (TSLA) had disappointing earning reports during after-hours on Tuesday. Investors did not get a clear path forward from both of these tech giants and this led to the huge market drop on Wednesday. Earnings from Apple (AAPL), Meta (META), Microsoft (MSFT) are scheduled next week and will lead investor sentiment in tech. The Personal Consumption Expenditures (PCE) Index was reported on Friday, which showed prices rose at the slowest pace in over three years. This is the FED's preferred measure of inflation and these results have set the stage to line up with investors' forecasted rate cut in September. Top economists and analysts argue that the FED has taken too long to cut rates based on the current economic conditions and this delay may negatively impact the economy in the future.

What is the PCE report? Why is it important?

The Personal Consumption Expenditures (PCE) report is a critical metric of inflation that measures the price changes of goods and services consumed by individuals in the US. The Federal Reserve monitors the PCE to assess inflationary pressures on consumer prices as a part of the broader macroeconomic performance. The PCE's significance in the stock market is due to its strong relationship with economic growth, company profits, and corporate earnings, as investors and economists follow post-PCE release to adjust their investments and economic outlooks.