To The Moon

The stock market have a choppy session with 10-year treasury yield rise to new high at 4.73%. This makes the stocks turned in a mixed performance on Wednesday, with major indexes fluctuating between slight gains and losses throughout the session, as investors prepare for the highly anticipated jobs report later this week.

Despite the volatility in mega caps and some economic releases, the S&P 500 ended 0.16% higher, while the DJIA gained 0.25%. In contrast, the Nasdaq Composite declined by 0.06%.

Economic Data Show Employment Challenges

We saw the ADP Employment Change for December came in at 122,000 with consensus set at 131,000, Weekly Initial Claims was lower at 201,000 than the consensus which was at 218,000 while the previous was at 211,000. The ADP report showed a below-consensus employment change, while initial claims unexpectedly dropped.

Though layoff activity remains low, but finding new employment has become more challenging. Consumer credit contracted in November, marking only the third contraction in 16 months, with revolving credit acting as a drag due to high interest rates.

The Weekly MBA Mortgage Applications was higher though at -3.7% while the previous was recorded at -21.9%. Weekly Continuing Claims was higher at 1.867 million even though previous was revised lower to 1.834 million from 1.844 million.

November Wholesale Inventories remain unchanged at -0.2% compared to consensus which was also at -0.2%. November Consumer Credit came in lower at -$7.49 billion than consensus which was $9.1 billion though previous was revised lower to $17.3 billion from $19.2 billion.

FOMC Minutes Indicate Slightly Hawkish Though No Immediate Need For Rate Cut

The FOMC Minutes from the December 17-18 meeting reflected Fed Chair Powell's comments, suggesting no immediate rate cut until inflation approaches the 2% target or if the labor market weakens significantly.

Stocks and bonds remained steady, while the fed funds futures market adjusted expectations for rate cuts. The probability of a 25-basis point rate cut at the March FOMC meeting decreased to 39.2%, down from 48.4% a week ago and 50.9% a month ago.

S&P 500 Sector Healthcare Winner With Modest Gain

The healthcare sector gained 0.53% with 4.30% gain from medical device maker $Boston Scientific(BSX)$ announced a definitive agreement to acquire Bolt Medical, a manufacturer of laser equipment for treating heart conditions. Boston Scientific already holds a 26% stake in Bolt Medical, and with the deal to purchase the remaining portion, the firm is aiming to strengthen its position in the fast-growing intravascular lithotripsy (IVL) market.

Mega-cap technology stocks, which led Tuesday's selloff, were mixed on Wednesday. Apple (AAPL), Microsoft (MSFT), Amazon (AMZN) and Tesla (TSLA) gained ground, while Nvidia (NVDA), Alphabet (GOOGL) and Meta Platforms (META) slipped. Despite this, information technology managed to gain a modest 0.10%.

Note Yield Little Changed After 10-Year Peak At 4.73%

The Treasury market showed little change from the previous day. The 10-year yield increased by one basis point to 4.69%, and the 2-year yield decreased by one basis point to 4.29%. Treasuries reacted to economic releases and the $22 billion 30-year bond reopening, which saw strong demand.

Stocks To Watch

$Costco(COST)$ reported a remarkable 9.9% rise in December comparable sales, significantly exceeding the consensus expectation of 5.2%. This growth was driven by a 9.8% increase in the U.S., a 10.3% rise in Canada, and a 9.8% boost in international markets. E-commerce sales surged 35.7%, partly due to a calendar shift that moved Cyber Monday into December. This shift positively impacted total and comparable sales by about 1.5%. Costco's performance highlights its strong market position and adaptability in the e-commerce space.

$NVIDIA(NVDA)$ and $Microsoft(MSFT)$ continue to lead in artificial intelligence, as evidenced by a UBS survey of IT executives. The survey revealed that 100% of organizations are exploring AI, with 61% already using AI applications. Despite this, only 11% have scaled AI initiatives, with many planning to do so by 2026. This slower-than-expected adoption may disappoint investors looking for quicker returns from AI innovations.

I think investors who are looking for short-term gains, might want to relook into their strategy because we can see now that NVDA and MSFT has came up to lead the A.I. according to IT executives, one is a provider of chips and one is a hyperscaler, so they do compete, but collaborate. This relationship might come from other big hyperscalers as well.

I am holding onto my NVDA and will add more if it goes close to $130, because the runway for NVDA to realise the profit and monetization from A.I. should be great.

If I looked at the EMA, NVDA bulls have managed to defend the 26-EMA period, and now NVDA is close to 12-EMA, which we should see some small correction when we come back from one-day break,

But if NVDA bulls continue to attempt the daily uptrend while defending the 26-EMA period, we should see a recovery once NVDA hit around $135, worst case scenario might see NVDA going to $130.

$Eli Lilly(LLY)$ received a boost as Medicare began covering its weight-loss drug Zepbound for obstructive sleep apnea in obese patients. This coverage could pave the way for broader Medicare inclusion. Zepbound, also known as tirzepatide, was recently approved by the FDA and is marketed for diabetes under the name Mounjaro. This development strengthens Eli Lilly's position in the obesity treatment market.

Quantum computing stocks, including Rigetti Computing (RGTI), Arqit Quantum (ARQQ), and D-Wave Quantum (QBTS), suffered significant declines after Nvidia's CEO Jensen Huang suggested that practical quantum computers are still decades away. This statement dampened investor enthusiasm for the sector, leading to substantial stock price drops.

AMC Entertainment (AMC) CEO Adam Aron disclosed his substantial shareholding in the company, reaffirming his commitment despite the stock's poor performance over the past year. Aron plans to acquire more shares, reflecting his confidence in AMC's future despite recent challenges.

Sana Biotechnology (SANA) experienced a surge, climbing over 200% following positive Phase 1 trial results for its UP421 cell therapy. The trial showed promising results for treating type 1 diabetes without immunosuppression, boosting investor confidence in Sana's hypoimmune platform.

AMD (AMD) shares dropped over 4% after HSBC downgraded the stock, citing concerns over its AI GPU roadmap compared to Nvidia's offerings. The downgrade reflects skepticism about AMD's ability to compete effectively in the AI GPU market, particularly regarding its upcoming MI325 GPU.

Summary

We might see some more consolidation when we returned from one day break, the market should remain mixed as investors could be in buy-the-dip scenarios again. With the job data coming on Friday, we should see a stronger labor market, this might get the Fed not to reduce rate so fast.

This sentiment might have investors moving their monies into more defensive assets.

Appreciate if you could share your thoughts in the comment section whether you think market would come back with a mixed sentiment on Friday (11 Jan) when we returned from one day break.

@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.