Market Trends: Over-Acquired Stocks and Analyst Insights
This week, some stocks, including eBay and Intel, are receiving significant attention on Wall Street, with signs that a pullback might be on the horizon. The three major US indices hit all-time highs, boosting investor confidence, especially after new consumer inflation data hinted at potential interest rate cuts during the Federal Reserve’s September meeting. The S&P 500 and Nasdaq Composite rose by 0.9% and 0.8%, while the Dow Jones Industrial Average saw a 1.7% increase.
Following this surge, CNBC utilized its Pro Stock Screener Tool to highlight stocks that have been notably over-acquired, using the 14-day relative strength index (RSI) as a measure. Generally, a stock RSI above 70 suggests it has been heavily purchased, which can indicate a possible future decline. A list of stocks with RSIs exceeding 70 as of Friday morning includes biopharmaceutical company Incyte and e-commerce giant eBay, with RSIs around 80 and 77, respectively. Incyte’s shares climbed 11% this week, totaling an impressive 26% annual growth. Wells Fargo has recently upgraded Incyte to an overweight rating, with a price target of $89, especially with an expected update on its myelofibrosis treatment coming in the fourth quarter—hopeful for positive news on this rare condition.
eBay also saw an 8% rise in its shares this week, driving its annual growth over 62%. The company’s recent earnings report for the second quarter exceeded expectations, along with bright forecasts for the near future.
On the other hand, Intel reported a 23% annual profit with an RSI of 71.3. This marks its best week in over 25 years after significant losses last year, where the stock had dropped 60% in value. A Bloomberg report suggested that the Trump administration may consider taking stakes in Intel to bolster US manufacturing efforts. Following this news, Gil Luria, a tech research head at DA Davidson, indicated that government support for Intel could be crucial for US national security. Despite this, sentiments around Intel remain mixed; out of 46 analysts reviewing the company, 39 recommend holding, while only two suggest buying its stock.
