To The Moon

We saw market display positive bias on last trading day of July (31 July) it was driven by strength in the semiconductor space and mega-cap stocks throughout the session.

There is no pre-commitment by Fed Chair on FOMC to cut rates at the September meeting, but there is suggestion that if Fed gets the data it is hoping for, then there might be a discussion of a rate cut. So the press conference has met the market expectations.

S&P 500 jumped by +1.58% with NASDAQ gaining the most at +2.64%, while DJIA managed a modest gain of +0.24% and Russell 200 with a +0.5% gain.

$NVIDIA Corp(NVDA)$ emerge as top performer with a +12.81% gain, and help the PHLX Semiconductor Index (SOX) jumped 7.0%. Microsoft's robust capex budget, and talk that some foreign companies could be exempt from export restrictions to China has also contributed to the positive bias. Boeing (BA) also stood out after reporting earnings, gaining 2.0%.

More Buying Interest Seen During FOMC Decision and Fed Chair Press Conference

Market saw more buying interest started to come in during the FOMC decision and Fed Chair Powell's press conference, but that only happen for a short period with gains faded slightly ahead of the close.

Though the major indices settled with solid gains, but it was little changed from levels seen before the 2.30pm ET. The FOMC voted unanimously to leave the target range for the fed funds rate unchanged at 5.25-5.50%, as expected. The Fed is approaching its mandate in a more balanced manner, not overweighting the inflation side as it had been in prior meetings. This nuanced transition aligns with comments from various Fed officials leading up to today's decision.

Information Technology Back At Lead Position Again

Strength in the semiconductor space and mega-cap stocks throughout the session has helped to bring the Information Technology sector back to the lead, with a impressive +3.95% gain despite lacklustre showing by Microsoft which fell 1.1% with earnings-related loss .

Consumer Discretionary was also up by +1.79% because of +4.24% gain from $Tesla Motors(TSLA)$. The strength in semiconductor shares was in response to earnings news from $Advanced Micro Devices(AMD)$

Treasury Yields Declined In Response

Treasuries had a somewhat muted response. The 10-year note yield fell to 4.064% and the 2-year note yield declined to 4.294%.

This seem to be in response to the FOMC meeting where there is no pre-commitment of a September rate cut possibility.

Labor Data Moderate Might Convince Fed For September Rate Cut

The Weekly MBA Mortgage Applications Index was lower at -3.9% compared to the previous recorded at -2.2%. July ADP Employment Change was also lower at 122K than the consensus at 160K while the previous was revised to 155K from 150K.

Q2 Employment Cost Index was 0.9% lower than consensus at 1.0% with previous recorded at 1.2%.

June Pending Home Sales was 4.8% higher than the consensus at1.5% while previous was revised to -1.9% from -2.1%. The July Chicago PMI was lower at 45.3 than the previous at 47.4.

The key takeaway is a year-over-year moderation in wages, salaries, and benefit costs, suggesting the Fed might be convinced to cut rates in September.

Stocks To Watch

$Meta Platforms, Inc.(META)$ saw a significant postmarket rise after reporting strong second-quarter earnings that exceeded expectations. The company posted earnings per share of $5.16, surpassing the anticipated $4.78, and reported revenue of $39.07 billion, beating the expected $38.31 billion. Meta also provided optimistic sales guidance for the current quarter, projecting between $38.5 billion and $41 billion, compared to the expected $39.2 billion.

Despite increasing tech spending, particularly in artificial intelligence, the stock's positive reaction defied the recent trend of declines among tech giants post-earnings reports.

If we looked at the technical, we are already seeing potential signal of upside coming from MACD and KDJ before its earnings after hours, this might be the reason why investors confidence and also market sentiment is important when earnings guidance is positive, despite some challenges.

I would think META is still a good BUY at the current price after its earnings, because it has potential to go back to its previous highs.

$Qualcomm(QCOM)$ shares jumped 4.5% in extended trading following the release of its fiscal third-quarter results, which topped expectations. The company reported an adjusted earnings per share of $2.33 and a revenue increase of 11.3% year-over-year to $9.39 billion. Notably, automotive sales surged 87% to $811 million, while handset sales rose 12% to $5.9 billion. CEO Cristiano Amon highlighted the launch of Snapdragon X Series solutions as a significant milestone in transforming Qualcomm from a communications company to a broader tech entity.

QCOM technical has give us a mixed signal, with MACD showing that it might experienced a downside, but KDJ is giving a potential buy before its earnings release, so the market sentiment is important for trading QCOM as the demand for this mobile phone chips and market confidence for this chip designer products and solutions is important.

This is also another potential buy consideration.

Arm Holdings (ARM) experienced a 9% decline in extended trading despite reporting fiscal first-quarter results and guidance that exceeded expectations. The company posted an adjusted earnings per share of $0.40 and a 39% year-over-year revenue increase to $939 million. However, its forward guidance for the second quarter came in below analyst expectations, projecting adjusted earnings between $0.23 and $0.27 per share and revenue between $780 million and $830 million.

Summary

Market has displayed that mega cap and semiconductor still hold the strength to make it move into a rally mode. There is a few more big names coming this week, so we might continue to see positive bias again on 01 Aug (Thursday).

Appreciate if you could share your thoughts in the comment section whether you think market would give another positive bias on the back of strength coming from more mega cap and semiconductor earnings.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.