The SPDR S&P 500 ETF Trust (SPY) tanked 1.19% on Tuesday. Key factors influencing the market today include a decline in technology stocks, particularly those in the artificial intelligence (AI) sector, due to concerns over high valuations and the ongoing U.S. government shutdown.
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Within SPY’s holdings, the Financials, Consumer Staples, and Healthcare sectors posted gains today, while the Consumer Discretionary and Technology sectors declined.
Importantly, SPY closely tracks the S&P 500 Index (SPX), which ended 1.17% lower. Also, the tech-heavy Nasdaq 100 (NDX) fell 2.1%.
What Impacted the Market Today?
Today’s weak performance was primarily due to concerns over the valuation of technology and AI-related stocks following a market rally. Also, concerns were raised about the AI boom potentially resembling a bubble, drawing comparisons to the dot-com bubble.
Moreover, a major security breach on the Ethereum network, which resulted in over $100 million being stolen, created a broader risk-off sentiment and also affected the stock market.
Looking ahead, events that can trigger volatility in the SPY ETF include the ongoing U.S. government shutdown and the release of key economic data, such as the ADP National Employment Report and Services PMI readings, which will provide clues about the economy’s health.
Fund Flows and Sentiment
SPY’s 5-day net inflows totaled $2 billion, showing that investors put capital in SPY over the past five trading days. Meanwhile, its three-month average trading volume is 72.99 million shares.
It must be noted that retail sentiment remains neutral, while hedge fund managers increased their holdings of the SPY ETF in the last quarter.
SPY’s Price Forecasts and Holdings
According to TipRanks’ unique ETF analyst consensus, which is based on a weighted average of analyst ratings on its holdings, SPY is a Moderate Buy. The Street’s average price target of $775.83 for the SPY ETF implies an upside potential of 14.9%.
Currently, SPY’s five holdings with the highest upside potential are DuPont de Nemours (DD),
Loews (L), Fiserv (FI), Moderna (MRNA), and Smurfit Westrock (SW).
Meanwhile, its five holdings with the greatest downside potential are Palantir (PLTR), Tesla (TSLA), Paramount Skydance (PSKY), Intel (INTC), and Super Micro Computer (SMCI).
Revealingly, SPY’s ETF Smart Score is eight, implying that this ETF is likely to outperform the broader market.
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