There is a Strong Possibility of a Rebound in These S&P 500 Stocks

Despite the S&P 500 marking its second consecutive weekly loss, there are signs of opportunity for investors. Many stocks appear oversold based on technical indicators, suggesting they could be primed for a rebound.

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Over the past week, the S&P 500 declined by 1%, while the Nasdaq Composite dropped 3.5%, weighed down by technology stocks. In contrast, the Dow Jones Industrial Average outperformed, rising by 1% for the week.

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Investor sentiment has been shaken by new tariff announcements from the Trump administration and signs of economic slowing. Adding to the pressure, Nvidia—widely regarded as a key player in the artificial intelligence boom—fell 8.5% on Thursday following its latest earnings report, dampening the market’s optimism as the new year begins.

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In this environment, CNBC Pro used its stock screener tool to identify the most oversold and overbought stocks on Wall Street, based on their 14-day relative strength index (RSI). An RSI below 30 typically signals an oversold condition, suggesting the potential for a rebound. Conversely, an RSI above 70 indicates a stock may be overbought and vulnerable to a pullback.

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Tesla Among the Most Oversold Stocks

One of the most notable oversold stocks is electric vehicle manufacturer Tesla, which has an RSI of 18. Tesla’s shares tumbled 13% this week, including an 8% decline on Tuesday alone. Since reaching a record closing high of $479.86 on December 17, Tesla’s stock has dropped by 40%.

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The recent sell-off was triggered by a Reuters report on Monday, which detailed customer dissatisfaction with Tesla’s autopilot software upgrades in China. Barclays analyst Dan Levy suggested in a note on Wednesday that the downturn may also be a result of reversing the technical factors that fueled Tesla’s prior rally.

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“We believe the sell-off reflects an unwind of the sharp euphoria and technical factors that drove the stock higher last fall after the U.S. elections, with fundamentals playing a minimal role,” Levy wrote. He also noted that Bitcoin’s decline since mid-December has mirrored Tesla’s drop, implying a broader retreat from speculative assets and those linked to Trump-era policies.

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Despite the downturn, Morgan Stanley remains bullish on Tesla. On Thursday, the firm reiterated its overweight rating, with analyst Adam Jonas emphasizing Tesla’s unique position to facilitate the entry of Chinese electric vehicle manufacturers into the U.S. market.

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PayPal Faces Investor Skepticism

Another stock facing significant bearish sentiment is PayPal, which ended the week down 5.2%. For the year, PayPal’s stock has fallen by 17%. This latest decline followed the company’s first investor day in four years, where CEO Alex Chriss outlined a turnaround plan aimed at revitalizing growth.

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A key part of the strategy involves expanding the revenue of PayPal’s Venmo app, which is projected to reach $2 billion by 2027. This is more than double the $900 million in annual revenue Venmo generated in 2021. However, investor reaction to the plan has been cautious, contributing to the stock’s recent weakness.

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Philip Morris and Gilead Sciences Among Overbought Stocks

While some stocks are in oversold territory, others are showing signs of being overbought. Philip Morris International is one such example, with an RSI of 78. The tobacco giant’s stock has surged 29% year-to-date, including a 19% rally this month alone.

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The recent gains followed the company’s fourth-quarter earnings report, which exceeded analyst expectations. The strong performance was largely driven by robust sales of Zyn nicotine pouches, which are particularly popular among younger consumers.

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In January, Morgan Stanley initiated coverage on Philip Morris with an overweight rating, highlighting the growth potential of its smoke-free product line. The firm noted that the increasing contribution of reduced-risk products could drive stronger-than-expected long-term sales and earnings growth, supporting further gains for the stock.

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Gilead Sciences also landed on the overbought list with an RSI of 78. The biopharmaceutical company’s shares have climbed 18% this month, buoyed by better-than-expected fourth-quarter earnings and revenue. Last week, Deutsche Bank upgraded Gilead from a hold to a buy rating, citing the company’s ability to maintain revenue growth from its core HIV treatment franchise well into the 2030s.

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“We’re raising our price target to $120 based on Gilead’s ability to manage its HIV treatment life cycle and deliver consistent revenue growth,” Deutsche Bank stated. So far this year, Gilead’s shares have risen by 24%, reflecting renewed confidence in the company’s long-term prospects.

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In summary, while the broader market faces headwinds from trade concerns and economic uncertainty, several oversold stocks, including Tesla and PayPal, may present buying opportunities. Meanwhile, overbought names like Philip Morris and Gilead Sciences could be poised for a pause or pullback following their recent rallies.

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