On Wednesday, we saw significant pressure in the stock market due to losses in major stocks and concerns about rising Treasury yields.
There was a lack of influential leadership and buyer interest, which also affect the oil and precious metals market, this is despite stock ending in their worst levels with DJIA down more than 500 points.
Decliners outpaced advancers by nearly 3-to-1 at both the NYSE. The economic data release with existing home sales fell 1.0% month-over-month in September to a seasonally adjusted annual rate of 3.84 million, slightly below the consensus of 3.90 million. Sales were 3.5% lower than the same period last year.
These indicates that while more inventory is available, the market remains tight, as shown by the rising median home price and low mortgage delinquency rate. The MBA Mortgage Applications Index decreased by 6.7% week-over-week, with refinance applications down 8% and purchase applications down 5%.
We will be expecting the Weekly Initial and Continuing Jobless Claims at 08:30 ET, which might cause some movement to the equities when market open. During the market hours, we will be expecting the Preliminary October S&P Global U.S. Manufacturing and Services PMIs at 09:45 ET and the September New Home Sales at 10:00 ET.
Only Real Estate and Utilities Sectors In The Green
Real estate and utilities sectors both gained 1.0%, driven by a defensive trade approach. This was also reflected in the 6.7% increase in the CBOE Volatility Index, which reached 19.41.
Consumer Discretionary sector lost -1.8%, Information Technology was down by -1.7% and Communication Services also suffered decline of -1.4%.
These sectors, which include mega-cap components, were the weakest performers. The Vanguard Mega-Cap Growth ETF (MGK) declined by 1.6%.
Losses in the other six sectors ranged from 0.1% to 0.5%, with the industrials sector down 0.3%, affected by $Boeing(BA)$ loss of 1.8% to 157.06 after its earnings report and a cautious outlook from the new CEO.
Note Yield Settled Higher Amid Selling Pressure
The 2-year note yield reached 4.092% and the 10-year note yield climbed three basis point to 4.246%, with further selling pressure and a disappointing 20-year bond reopening contributing to the week's losses.
These securities settled the cash session at 4.092% and 4.246%, respectively, which dampened buy-the-dip interest in the stock market.
Stocks To Watch
$Tesla Motors(TSLA)$ surged in after-hours trading following a strong earnings report, breaking its streak of missing EPS estimates. The company reported a Q3 EPS of $0.72, surpassing the $0.60 consensus, and a revenue increase of 7.8% year-over-year to $25.18 billion. Tesla's operating margin improved to 10.8%, and its GAAP gross margin rose to 19.8%. Despite missing revenue expectations by $490 million, the market reacted positively to the overall financial performance.
In my earlier article, I also mentioned that TSLA MTF is showing neutral and if TSLA can beat the expectations and surge, and trade above the short-term and long-term MA, we would be seeing TSLA going into an upside movement.
MACD is going to form a nice bullish MACD crossover, so it might still not late to get into TSLA.
$Peloton Interactive, Inc.(PTON)$ saw its stock jump 11% after David Einhorn (Trades, Portfolio) of Greenlight Capital pitched the company as a long idea at the Robin Hood Investor Conference. Einhorn's endorsement follows Greenlight's acquisition of 6.8 million shares in Q2, positioning it among the top 15 holders of Peloton. The exercise equipment company has been deemed significantly undervalued by Einhorn, contributing to the stock's rise.
I think PTON already have a strong trend from the technicals, so we will be expecting more upside trading. MACD is giving a very confirmed upside movement, and MTF is showing strong uptrend, with PTON trading above the short-term and long-term MA.
So it might be a good time to consider adding PTON into your portfolio.
$Lam Research(LRCX)$ shares rose nearly 4% after reporting fiscal Q1 results that exceeded expectations. The company posted an adjusted EPS of $8.60 with a 19.8% revenue increase to $4.17 billion. Lam Research anticipates Q2 revenue to be around $4.3 billion, with continued strong performance expected in the semiconductor equipment sector.
As mentioned in my earlier article, LCRX stock price looked undervalued and now we should be seeing a reversal coming from LRCX as the stock price surge after the results beat expectations, I would think the current stock price should be a good potential.
I will be considering to add this stock to my portfolio, I will monitor the price action today (24 Oct).
Amazon (AMZN) introduced a new fuel discount for Prime members, offering a 10 cents per gallon reduction at BP-owned gas stations. This initiative is part of Amazon's strategy to compete with Walmart's (WMT) similar discount program. The discount is expected to expand to EV charging stations operated by BP Pulse next year as Amazon seeks to enhance its Prime membership benefits.
L3Harris Technologies (LHX) and $Palantir Technologies Inc.(PLTR)$ announced a strategic partnership to accelerate digital transformation. The collaboration will integrate L3Harris' systems with Palantir's AI platform, enhancing capabilities across their joint-all-domain network. This partnership aims to leverage advanced technologies for improved operational efficiency.
Palantir is still keeping its upside and with more partnership coming ahead of its next earnings result, this looks like a good build up. I am expecting PLTR to be trading range bound around $43, and if it can cross $45 by end of October, then we could be seeing a new price target in the $50s after its earnings.
One thing that is of concerns is the MACD, this is in a bearish movement, hence, we might see PLTR moving range bound. But I would be holding my position for PLTR till the next earnings.
NextEra Energy (NEE) is exploring the possibility of restarting its Duane Arnold nuclear power plant in Iowa. Discussions with U.S. regulators and engineering studies are underway, although the economic viability remains uncertain. The move reflects a broader interest in recommissioning older nuclear facilities for energy production.
Costco Wholesale (COST) saw a positive market response after Morgan Stanley highlighted a potential boost in membership following the rollout of card scanners at U.S. clubs. This strategy is likened to Netflix's subscriber growth tactics, potentially increasing Costco's membership fee income significantly in upcoming quarters.
Summary
I think market is still going to face pressure though it is holding the key levels, but we need catalyst to help push the market a bit, will Tesla be able to do that?
I would think that investors might still be looking for clues on whether the inflation is really falling and earnings next week of the mega cap stocks might be something to watch out.
Appreciate if you could share your thoughts in the comment section whether you think market is going to face pressure again today (24 Oct).
@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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