Stock market on Monday (16 Sep) saw the DJIA jumped more than 200 points to close +0.55% higher setting a new record high. S&P 500 has a modest rise +0.13% which is still 0.6% below its all-time high. NASDAQ was the only decliner with -0.52% decline.
NASDAQ’s performance was dragged down by Mega cap names and semiconductor shares, which outperformed last week.
Apple (APPL) down by more than 2% after speculation that iPhone16 Pro demand has been weaker than expected. Other names like NVIDIA (NVDA), Amazon.com (AMZN), and Broadcom (AVGO) also influence the decline in NASDAQ.
The Invesco S&P 500 Equal Weight ETF (RSP) closed 0.7% higher, and advancers had a 2-to-1 lead over decliners at the NYSE.
Information Technology and Consumer Discretionary Sector The Only Decliner
Nine sectors closed higher than last Friday (13 Sep) due to broad buying activity. Financial sector which contribute 13% to S&P 500 index was the top performing sector with +1.22% gain.
Energy came in second with +1.20% due to rising oil prices. WTI crude oil futures settled 2.2%, or $1.54, higher at $70.22/mmbtu.
Rate Cut Expectations Of 50 Basis Points Increased
Increased expectations of a 50 basis points rate cut at this week's FOMC meeting supported the underlying positive bias in equities through the session. This view followed a weekend article from The Wall Street Journal's Greg Ip arguing for a larger cut and a Bloomberg column penned by former FOMC Vice Chair Dudley calling for a 50 basis points decrease to the fed funds rate.
The fed funds futures market now sees a 62.0% probability of a 50 basis points cut on Monday (16 Sep), up from 50.0% on last Friday (13 Sep) and 30.0% on 05 Sep, according to the CME FedWatch Tool.
Note Yield Was Lower Reacting To 50 Basis Rate Cut Expectations Increased
The Treasury market and US dollar also reacted to this development. The 10-year yield settled two basis points lower at 3.621%.
The 2-year yield settled four basis points lower at 3.557%. The U.S. Dollar Index fell 0.4% to 100.76.
Economic Data Review and Upcoming
We have the September NY Fed Empire State Manufacturing on Monday which came in at 11.5 higher than consensus which was at -4.1%, the previous was at -4.7.
We will be expecting the August Retail Sales report at 8:30am ET on Tuesday (17 Sep).
Stocks To Watch
$Intel(INTC)$ announced a strategic partnership with $Amazon.com(AMZN)$ to produce custom artificial intelligence chips, marking a significant expansion of their existing relationship. This multi-year, multi-billion-dollar agreement will see Intel manufacturing AI fabric chips using its 18A foundry process technology and custom Xeon 6 chips for Amazon Web Services. Intel's stock surged over 8% in extended trading following the announcement.
Additionally, Intel (INTC) shares rose 6% after confirming it would receive up to $3 billion in direct funding under the CHIPS and Science Act for its Secure Enclave program. This funding is separate from the $8.5 billion previously announced and will support semiconductor manufacturing and R&D projects in various U.S. states. Intel's foundry is set to begin chip production next year.
This partnership does not seem to benefit Amazon in last night trading, where Intel has gained more than 6% where Amazon was down slightly around 0.8%.
Intel and Amazon both looked to still have potential for more upside from MACD and KDJ, but Intel still have more room, so the current price might still provide a buying opportunity, but we could wait for some adjustment.
For Amazon, MACD is showing a nice upwards movement, but KDJ is showing some signs of J value downside, so I would continue to monitor and see how this would be moving.
$Oracle(ORCL)$ saw its shares increase by more than 6% after reporting strong fiscal Q1 results, with accelerating growth in Oracle Cloud Infrastructure (OCI). The company also updated its revenue expectations, forecasting $66 billion by 2026 and $104 billion by 2029. Oracle's remaining performance obligations soared 53% to $99 billion, reflecting robust demand for its cloud services.
Oracle technical is still showing upside potential and it looks like we are going to expect more upside trading from Oracle.
Amazon (AMZN) CEO Andy Jassy announced that employees are expected to return to the office five days a week, citing improved collaboration and productivity in an in-office environment. This shift marks a return to pre-pandemic work arrangements, aiming to strengthen company culture and teamwork.
Several semiconductor companies in Apple's (AAPL) supply chain, including Broadcom (AVGO), Skyworks Solutions (SWKS), Qorvo (QRVO), and Cirrus Logic (CRUS), fell sharply due to concerns over lower-than-expected demand for the iPhone 16 series. TF International Securities reported that pre-order shipments were down 12.9% year-over-year.
$MicroStrategy(MSTR)$ announced plans to offer $700 million of convertible senior notes due 2028 in a private offering to institutional buyers. The company also expects to grant an option to purchase up to an additional $105 million of the notes within a 13-day period.
I hope this offer would continue to help push the upside seen from MACD and KDJ further, and with crypto especially Bitcoin experiencing volatility. This might help MSTR to evade it.
Summary
I would think there might still be some weakness coming from the mega cap stocks which might drag S&P 500 next, but we need to trade carefully as there might be some surprise coming from names like Amazon and Alphabet.
I am holding onto my positions on these 2 stocks.
Appreciate if you could share your thoughts in the comment section whether you think market would still be dragged down by mega cap stocks as rate cut of 50 basis point expectations increases.
@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.
Comments
Waiting for more news to come out