Following strong quarterly results from Alphabet (GOOGL) which increased by 2.82%, stocks rose initially but stocks began their retreat giving the market a mixed performance at the end of session. S&P 500 was up by as much as 0.3%, and the NASDAQ rose by 0.4% at their peak.
However, early gains faded without a specific catalyst, resulting in the S&P 500 closing 0.33% lower and the NASDAQ by 0.56%. Many stocks retreated from session highs, but the declines were relatively limited, with the equal-weighted S&P 500 dropping 0.2% compared to yesterday's close.
Semiconductor stocks, especially Advanced Micro Devices (AMD), which fell by 10.62%, this pressured major indices throughout the session following disappointing earnings and weak Q4 revenue guidance.
Economic Data Give Mixed Picture Of Economy
Economic data released Wednesday morning offered a mixed picture of the economy, as private payrolls numbers from ADP's private-sector payroll estimate, which showed a larger-than-expected increase of 233,000 jobs in October, with September's figures revised upward, while the first reading on third-quarter GDP was weaker than economists had anticipated and advance Q3 GDP report indicated solid economic growth driven by consumer spending.
S&P 500 Information Technology Sector Lost More Than 1%
Tech stocks were the big movers on Wednesday. Shares of Super Micro Computer (SMCI) plunged 33%, leading S&P 500 and Nasdaq decliners, following news this morning that the company's auditor had resigned. Chipmaker Advanced Micro Devices (AMD) fell 11% after a disappointing earnings report,
This has caused S&P 500 Technology to be the only sector losing more than 1% at -1.34%, communication services top the group with +0.99%, thanks to from performance Alphabet (GOOGL) which rose rose 2.82% after the Google parent reported better-than-expected quarterly results.
Note Yield Show Volatility Correlated To Interest Rates Expectations
The yield on 10-year Treasurys, which is correlated to expectations around where interest rates are headed, rose to 4.30% from 4.27% on Tuesday. The yield has been rising in recent weeks as market participants have recalibrated their thinking about how aggressive the Fed will be in cutting its benchmark lending rate.
The initial market rally occurred despite volatility in the Treasury market, with the 10-year yield reaching a low of 4.20% before settling at 4.294%. The 2-year note yield also lost four basis point to close at 4.185%.
Stocks To Watch
$Meta Platforms, Inc.(META)$ reported impressive third-quarter results, with a GAAP EPS of $6.03, surpassing expectations by $0.74. The company achieved a significant revenue increase of 18.9% year-over-year, totaling $40.59 billion, which exceeded projections by $280 million. Despite these positive financial metrics, Meta's shares dipped by 2.74%. The company also highlighted a 5% increase in daily active people and a 7% rise in ad impressions across its apps. However, the total costs and expenses rose by 14% to $23.24 billion.
Super Micro Computer (SMCI) faced a major setback as its auditing firm, Ernst & Young LLP, resigned unexpectedly, leading to a sharp decline in its shares by over 32%. This development has raised concerns about the company's financial statements and corporate governance, prompting Needham to suspend coverage. Meanwhile, competitors Dell Technologies (DELL) and Hewlett Packard Enterprise (HPE) saw their shares rise by 6.4% and 2.4%, respectively, as they stand to gain from Super Micro's challenges.
Twilio (TWLO) experienced a positive market reaction, with its shares rising over 6% after reporting third-quarter earnings that exceeded expectations. The company posted an adjusted EPS of $1.02, beating estimates by $0.16, and a revenue increase of 9.7% year-over-year to $1.13 billion. Twilio's strong performance was attributed to a 10% growth in its communications revenue, and it raised its full-year guidance, showcasing financial discipline and innovation.
$Microsoft(MSFT)$ reported robust financial results for its first fiscal quarter, with a GAAP EPS of $3.30, exceeding estimates by $0.19. The company's revenue reached $65.59 billion, up 16.1% year-over-year, surpassing expectations by $1.03 billion. Microsoft's cloud segment was a significant contributor, with cloud revenue increasing by 22% to $38.9 billion. The tech giant returned $9 billion to shareholders through dividends and share repurchases during the quarter.
Eli Lilly (LLY) reported a strong 20% year-over-year revenue growth, driven by its GLP-1 tirzepatide franchise, including Mounjaro and Zepbound. Despite this, the company's shares fell by approximately 9% due to a lowered 2024 outlook. Mounjaro's revenue soared by 121% to $3.1 billion, while Zepbound, a newcomer in the market, contributed $1.3 billion in sales. However, the decline in Trulicity sales and the updated outlook affected investor sentiment.
Coinbase (COIN) posted a Q3 GAAP EPS of $0.28, missing estimates by $0.10, and reported revenue of $1.21 billion, which was below expectations by $40 million. The company's shares declined by 4% as it continues to navigate challenges in the cryptocurrency market, including lower trading volumes.
$Alphabet(GOOGL)$ Google Cloud announced the deployment of its new Axion chip, designed with $ARM Holdings Ltd(ARM)$ technology, to enhance streaming services. This chip is being utilized by companies like Spotify (SPOT) and Paramount Global (PARA). Google's cloud revenue increased by 35% year-over-year to $11.4 billion, as the company competes with traditional hardware manufacturers like AMD and Intel.
Are we going to see some positive action from GOOGL and ARM stock prices following this announcement, from the technical, I would think GOOGL still have rooms for more upside as the MACD crossover is still going strong, and with the MTF giving strong uptrend signal, I believe we can see more upside as the other mag 7 release results have been encouraging.
As for ARM, we are also seeing an encouraging bullish MACD crossover on 29 Oct, and this is before ARM earnings report next week on 06 Nov, and it is trading above the short-term MA, and MTF is giving a confident strong uptrend.
I am holding onto my position on both these two stocks as I believe they have growth in the coming future.
Summary
We are seeing initial rally brought by the previous day after hours earnings, but that did not last too long, so we might see similar behavior on last day of October 2024, unless we have a strong catalyst from pre-market earnings from financial names like $MasterCard(MA)$
I would think it is better to monitor the price action on the stocks that you are following, and take opportunity for mid to long term opportunity.
Appreciate if you could share your thoughts in the comment section whether you think market could initialise a longer rally after solid earnings from META and MSFT?
@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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