Stocks End Mostly Higher Last Week, Earnings, The Fed, And Inflation On Tap For This Week

Plus 5 Just-Added Strong Buys Stocks End Mostly Higher Last Week, Earnings, The Fed, And Inflation On Tap For This Week [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks End Mostly Higher Last Week, Earnings, The Fed, And Inflation On Tap For This Week [Stocks End Mostly Higher Last Week, Earnings, The Fed, And Inflation On Tap For This Week]Image: Bigstock Stocks closed mixed on Friday, but mostly higher for the week. The Dow, S&P 500, small-cap Russell 2000, and the mid-cap S&P 400 all finished higher for the week, making it 2 weeks in a row for all of them. The Nasdaq Composite and the Nasdaq-100, however, both closed lower for the week. They have been the clear leaders of this year's rally. But after surging to more than 30% and 40% gains this year, profit taking was bound to set in, and that's partly what weighed on prices last week. The other being the special rebalancing for the Nasdaq-100 that will have already taken place by the time you read this today. The Nasdaq Composite (the most quoted of the Nasdaq indexes), and the Nasdaq-100, differ from each other in that the Nasdaq-100 has 100 stocks, while the Composite is comprised of more than 2,500. The Nasdaq-100 also does not include financial companies. It is essentially a concentrated subset of the Nasdaq Composite Index, and focuses on the largest 100 domestic and international stocks. Due to the heavy concentration of big-tech heavyweights like Microsoft, Apple, Nvidia, Amazon, Meta, Tesla, and Alphabet, which make up over 55% of the index, and which has catapulted the Nasdaq-100 to a 41% gain this year, as of Friday's close (even higher than the Nasdaq Composite's 34%, and the S&P 500's 18%), the index will go thru a special rebalancing to reduce the weights of the index's largest holdings and increase the weights of others. This rebalancing will take place today (Monday July 24). Actually, the rebalancing is expected to be completed before the market opens today. Funds that track the index have likely already started selling shares in those with reduced weightings, and buying those with increased weightings. But you’re bound to see more of that continue today. But none of the 'Magnificent Seven' stocks (as those aforementioned mega-cap stocks have become known as), are being removed. They are just having their weightings lessened. Nonetheless, that also weighed on the Nasdaq last week. And could add to additional volatility this week. But traders will quickly turn their attention this week to earnings season as there are 983 companies on deck to report. (That number expands to 1,606 next week.) The main event(s) this week, however, will take place on Wednesday, 7/26, with the FOMC Announcement, and then on Friday, 7/28, with the release of the Personal Consumption Expenditures (PCE) index (the Fed's preferred inflation gauge). The Fed is widely expected to raise rates another 25 basis points. But investors will be listening for any indication on what the Fed's intentions are for the following meeting in September. Will they again raise rates by another 25 basis points? Or will they call it quits after July (assuming they raise in July)? Friday's inflation report could provide further insight into what the Fed does in September. Granted, we'll get 2 more CPI and PPI reports, 1 more PCE report, and 2 more Employment reports before the September meeting. But every data point is important. And that's why all eyes will be on Friday's inflation report. In the meantime, stocks have been on a tear. After a record first half, stocks are already off to a great start for the second half. Add in the favorable statistical trends, and expectations are high that we could be looking at a record year this year! See you tomorrow, [Kevin Matras - Signature] Kevin Matras Executive Vice President, Zacks Investment Research [Why Haven't You Looked at Zacks' Top Stocks?]( Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation. [See Stocks Free »]( Most Popular Articles from Zacks.com [Will Big Tech Earnings Keep the Rally Going?]( This combination of favorable macroeconomic developments and optimism about the transformational power of artificial intelligence (AI) appears to be driving market optimism. 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