10 Dec U.S. Stocks Slipped As End-Of-Year Rally Hit Resistance While Await CPI Data

On Tuesday (10 Dec), major U.S. equities indexes slipped lower on Tuesday ahead of Wednesday morning's Consumer Price Index (CPI) report, a key gauge of inflation that could influence next week's interest rate decision by the Federal Reserve.

U.S. stocks slipped for second consecutive session on Tuesday as the end-of-year rally hit resistance ahead of inflation data due today (11 Dec), mainly driven by profit-taking after last week's record highs and a strong performance since the beginning of the year.

The S&P 500, NASDAQ, and DJIA spent most of the morning near their previous closing levels before experiencing increased selling pressure in the afternoon. DJIA fell 0.35% Tuesday, its fourth consecutive losing session. The S&P 500 and NASDAQ which closed at record highs last Friday, both ended Tuesday's session 0.25% and 0.30% respectively.

Significant Stock Movement On Tuesday

Oracle (ORCL) stock tumbled 6% after the cloud-computing provider posted lower-than-expected adjusted quarterly earnings and revenue despite what CEO Safra Catz called "record level AI demand."

The stocks of cloud competitors Microsoft (MSFT) and Amazon (AMZN) both slipped on Tuesday, while Meta (META) inched higher.

Taiwan Semiconductor Manufacturing Co. (TSM), the world's largest contract chipmaker and a major supplier to Apple (AAPL) and Nvidia (NVDA), reported sales jumped 34% in November as AI demand remained strong. Its shares.

However, TSM slid more than 3% alongside other chip stocks like Nvidia, Broadcom (AVGO), and Micron (MU). This has caused $VanEck Semiconductor ETF(SMH)$ to decline by 2.52%.

S&P 500 Sectors Gains Driven by Alphabet Gains and Increased Consumer Confidence

The communication services sector was driven by gains of Alphabet which rose by more than 5%, the recent unveiling of their revolutionary quantum chip, Willow, has sparked a surge in quantum computing stocks. This has also help these quantum computing stocks, Rigetti Computing (RGTI) led the gains with a 45% increase, while Quantum Computing (QUBTl) and D-Wave Quantum (QBTS) also saw modest rises.

Then we saw consumer staples and consumer discretionary also closed in the green as retail sales in November showed resilience, growing 0.15% month-over-month and 2.35% year-over-year, despite the impact of the Thanksgiving holiday falling partially in December. The National Retail Federation remains confident in its holiday forecast, noting that consumers continue to purchase more goods even with lower retail prices.

These are the only three sectors in the positive territory as the market continued its downward trend this week, driven by profit-taking after last week's record highs and a strong performance since the beginning of the year.

Note Yield Continued To Rise

Treasury yields continued to rise after ticking higher on Tuesday, with the 10-year yield rising nine basis points to 4.234%, and the 2-year yield also increasing by one basis points to 4.157%.

Economic Data To Watch On Wednesday

Investors are awaiting a key consumer inflation report, scheduled to be released tomorrow, that will be one of the last pieces of data Federal Reserve officials get before they make their final rate decision of the year on Dec. 18.

Weekly MBA Mortgage Index with previous of 2.8% is expected at 7am ET. At 8:30 ET, we will be expecting November CPI with consensus at 0.3% compared to the previous at 0.2% while Core CPI with consensus at 0.3% with previous of 0.3% is expected.

We will also be seeing the data from Weekly Crude Oil Inventories at 10.30am ET with the previous at -5.07 million. Then we will see the November Treasury Budget at 2pm ET where previous was recorded at -$257.0 billion.

Stocks To Watch

$C3.ai, Inc.(AI)$ experienced a 5% dip in premarket trading despite surpassing fiscal second quarter estimates and raising its outlook. Analysts offered mixed reviews, with JMP Securities maintaining a Market Outperform rating and increasing the price target to $55. The company's guidance for the fiscal third quarter and year was mixed, with an expected non-GAAP operating loss range of -$38.6M to -$46.6M, and a full-year operating loss of -$105M to -$135M. C3.ai anticipates being free cash flow negative in the upcoming quarter.

$Oracle(ORCL)$ reported slightly weaker-than-expected fiscal second-quarter results, yet Wall Street remains optimistic due to continued cloud growth. Despite a 6% drop in premarket trading, analysts highlighted the company's accelerating growth in current remaining performance obligations, supported by cloud and AI advancements. Piper Sandler raised its price target, citing improved margins and expense management.

$Alphabet(GOOGL)$ shares jumped more than 5% after the company unveiled Willow, a quantum computing chip that it said can complete computations in less than five minutes that would take some of today's fastest supercomputers 10 septillion years.

As mentioned in my article yesterday, GOOGL have continued its upside and my holdings have increased by more than 5% in the midst of a market downward trend.

We are also seeing GOOGL trading way above the short-term MA and MACD is continuing its upside movement after we saw a bullish MACD crossover formed last week on 04 Dec and MTF is giving a strong upward trend as well.

I am expecting GOOGL to continue this upside movement as its quantum computing chips would gathered interest now in the AI race both in hardware and software.

$Tesla Motors(TSLA)$ shares approached their all-time high after Morgan Stanley boosted its price target on the stock and called it a top pick.

Actually there is no surprise why we saw TSLA continued to make new highs, as there is bullish MACD crossover formed last Friday (06 Dec), now we are seeing TSLA trading higher above the short-term MA period and also the MTF is giving a strong upward trend on TSLA.

I believe there would be some more upside movement from TSLA today (11 Dec).

GameStop (GME) reported a Q3 revenue decline of 20.4% year-over-year to $860.3 million, missing expectations. However, the company achieved a net income of $17.4 million, reversing a loss from the previous year. The balance sheet showed $4.616 billion in cash and securities, supported by a recent equity offering that raised $400 million. Despite the revenue miss, GameStop's financial position remains strong.

Summary

We might see more profit taking activities happening today (11 Dec) from some of the performing mag7 stocks like Alphabet, Amazon, Apple and Microsoft.

But we might see some performance coming from small-caps stocks as well, but overall I think we could see a third day of downward trend, maybe a small recovery happening if CPI data comes in within investors expectations.

Appreciate if you could share your thoughts in the comment section whether you think market would experience a third day of downward trend.

@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.