Yesterday we saw the major stock indices experienced limited fluctuation in early trading as investors awaited key market events. The advance-decline line showed a slight preference for advancers at both the NYSE and NASDAQ.
Market initially showed little reaction after the Federal Open Market Committee's (FOMC) unanimous decision to maintain the fed funds rate at 5.25-5.50%. But stocks start to rally after Fed Chair Powell indicated that a rate hike was unlikely in the near future. This statement prompted a drop in market rates, with major indices subsequently rising by over 1.0%.
But the market ended yesterday session with only Dow Jones in the green. The short rally after Fed Chair comment evaporated quickly.
Treasury Note Yield Fell After Fed Funds Rate Changes.
The yield on the 2-year note, highly sensitive to fed funds rate changes, decreased by 11 basis points to 4.94%. The 10-year note yield also fell by nine basis points to 4.60%. Despite these declines, a late-day loss of momentum, driven by uncertainties about prolonged high rates, left major indices close to their pre-event levels.
2-year yield saw a small increase at time of writing though.
Major Indices Flat Performance. Only DJIA Positive!
The Dow Jones Industrial Average (DJIA) saw a slight increase of 0.2%, while both the S&P 500 and Nasdaq Composite recorded losses of 0.3%. Amazon.com supported the broader market with a 2.3% increase in its stock price.
Conversely, significant earnings-related declines were seen in CVS Health, Starbucks (SBUX, Financial), and Skyworks Solutions (SWKS, Financial), which notably impacted the market.
Economic Reports Present Mixed Scenario
Recent economic reports present a mixed scenario with weakening manufacturing activity and rising prices:
Weekly MBA Mortgage Applications Index decreased by 2.3%. April ADP Employment Change reported at 192K, above expectations. The S&P Global US Manufacturing PMI and ISM Manufacturing Index both indicated a contraction in manufacturing activity.
March JOLTS reported job openings at 8.488 million, with a slight revision in prior data. March Construction Spending showed a decline, possibly due to increased financing costs and stricter lending standards.
Key Economic Data To Watch
Here are some of the key economic reports that we might want to watch. Weekly Initial and Continuing Claims, March Trade Balance, and preliminary Q1 Productivity and Unit Labor Costs. March Factory Orders and Weekly Natural Gas Inventories.
These reports would be able to tell us how the economy might be doing from the labor and factory output. Though rate hike might not be possible, but the possibility of rate cut might be also low, or we could even see one cut later this year.
Rate cut for 12 June 2024 meeting is not at around 12%, and this would need to be watched closely as currently June rate cut might not be possible.
Stock To Watch Today
$Qualcomm(QCOM)$
Qualcomm saw its shares jump 4.5% after providing optimistic third-quarter earnings and revenue forecasts that surpassed analysts' expectations. This positive outlook follows a robust performance in the second quarter, where Qualcomm reported earnings of $2.44 per share and revenue of $9.39 billion.
The company's automotive sales notably increased by 35%, contributing to the overall strong results. This news also positively impacted other semiconductor stocks like $Broadcom(AVGO)$ , Intel (INTC), and $NVIDIA Corp(NVDA)$ .
If we looked at the daily chart for QCOM, a sell signal actually appear prior to its earnings release after hours, but there is a sign shown by MACD that we might see an upside, as there is a small crossover.
So KDJ sometimes might not give a proper signal if used alone, especially when company is releasing their earnings, we should see an increase in demand and QCOM should be able to continue its 4% surge today into pre-market.
Alphabet (GOOGL)
Google announced a significant reorganization, which includes laying off at least 200 employees from its core teams. The restructuring will also see some positions being relocated to India and Mexico. This move is part of a broader trend of job cuts across the company, affecting various departments throughout the year.
$Apple(AAPL)$
Apple is gearing up to release its second-quarter earnings, with analysts forecasting a decline in revenue and earnings per share. This report is highly anticipated, especially considering Apple's recent underperformance compared to its tech peers and its efforts to integrate generative AI into its products.
This explains why we saw a small sell-off as shown by the KDJ, even though we have an upside MACD, would this continue into today’s session before Apple release its quarterly result.
I would think that we need to look beyond what the market might anticipate for Apple earnings, what would be interesting is Apple outlook for 2024, especially with the integration of AI into its phone.
$Amazon.com(AMZN)$
Amazon continues to expand its generative AI capabilities, which are now generating significant revenue. This development is part of Amazon's broader strategy to strengthen its cloud computing platform, AWS, by integrating advanced AI features that appeal to developers and businesses.
Even though Amazon has the strong plan to its broader strategy but its stock price does not react correlated to it. We are seeing the declining wedge, but with low demand (buying), market does not seem to react positively yet to its earnings.
I think we need to watch the price action and volume trading today (02 May) for Amazon.
Summary
I would think there might be some fluctuation in today’s trading as there might be short rally which could only last very short in the session before evaporating. If we look at how the S&P 500 sector have performed yesterday.
We could see that semiconductor sector has lost more than 3%, while the other sectors in the green, the gains is not so significant.
Appreciate if you could share your thoughts in the comment section whether you think we would see another volatile fluctuation with small rally today (02 May)?
@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.
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