Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. The S & P 500 and Nasdaq are moving lower Thursday, pressured by post-earnings sell-offs in several technology stocks, including Alphabet , ServiceNow and Fortinet . Alphabet's soft search results weighed on other internet names, such as Amazon. ServiceNow's two-penny-per-share earnings miss and mixed outlook took down other enterprise software names. Fortinet's disappointing outlook took down other cybersecurity stocks, although we caution against reading too much into it, as larger, best-of-breed vendors like CrowdStrike and Palo Alto Networks continually take share from other companies that cannot offer a full suite of cybersecurity products. Semiconductor stocks fell after Microsoft trimmed its full-year capital expenditure outlook due to delays at third-party compute providers. As tech stocks sold off, money rotated into other areas of the market — a theme that has become quite common during these Nasdaq downdrafts. Defensive stocks like healthcare and consumer staples, and interest rate-sensitive groups like real estate and…
We’re downgrading Alphabet after its rough quarter. Here’s where we’d buy again
In short
The CNBC Investing Club lowered Alphabet's rating to a 2 after soft search performance overshadowed positive momentum in its Cloud unit. Tech-led selling pressure spread throughout Thursday's session, exacerbated by weak reports from ServiceNow and Fortinet as well as falling semiconductor shares. Meanwhile, investors rotated funds into defensive and interest rate-sensitive sectors to hedge against further volatility. Attention now shifts toward dozens of major corporate earnings scheduled through Friday morning, including reports from Amazon, Intel, Exxon Mobil, and Chevron.
Key points
- Alphabet's downgrade highlights growing investor scrutiny over search revenue softness an…: Alphabet's downgrade highlights growing investor scrutiny over search revenue softness and the pace of artificial intelligence monetization.
- Tech sector declines were partially offset by capital rotating into defensive assets like…: Tech sector declines were partially offset by capital rotating into defensive assets like utilities, real estate, and consumer staples.
- Market direction hinges on a heavy slate of upcoming earnings from major players across e…: Market direction hinges on a heavy slate of upcoming earnings from major players across energy, tech, and healthcare sectors.