After the stocks surged on Wednesday (11 Dec), with NASDAQ above 20,000 points for the first time, catalyst by the soaring of technology companies shares.
We saw that the equities returned the previous big gains after the release of PPI economic data which set a negative tone for trading. We have S&P 500 and DJIA drop 0.54% and 0.53% respectively while NASDAQ declined more with -0.66%.
The monthly report on producer prices showed that wholesale inflation last month was higher than economists had expected, while weekly jobless claims numbers were also disappointing. Thursday's data came after consumer price numbers yesterday also showed that inflationary pressures persist.
Probability Rate Cut For December Still Priced In At 97% Despite Stubborn Inflation
Despite the stubborn inflation, market participants are pricing in a 96.7% chance that the Federal Reserve will cut the benchmark feds fund rate by a quarter point at its policy meeting next week, according to the CME Group's FedWatch Tool.
The Fed cut the key rate in September for the first time in four years, and made another reduction last month, as inflation got closer to the central bank's target level. But progress on inflation has slowed lately, which could keep the Fed from aggressively cutting rates in the months ahead.
S&P 500 Only Consumer Staples Closed In The Green
Consumer staples sector gained a modest 0.18% with help from $Hershey(HSY)$ which gained 3.93%, another names which have significant gain in same sector is Coca-Cola.
The communication was still down by 0.77% despite Warner Bros. Discovery (WBD) led advancers, rising 15% after announcing a restructuring. Adobe (ADBE) shares slid 14%, leading S&P 500 decliners, after the software provider issued a disappointing outlook for revenue even as its quarterly results exceeded analysts' expectations on the top and bottom lines.
Large-cap technology stocks were mostly lower on Thursday. Nvidia (NVDA), Alphabet (GOOGL), Amazon (AMZN), Meta (META) and Tesla (TSLA) fell, while Apple (AAPL) and Microsoft (MSFT) inched higher. Shares of Broadcom (AVGO) slipped 1.4% ahead of the release after the closing bell of the chipmaker's quarterly earnings report.
Note Yield Up As Interest Rates Expectations Headed In Favour
The yield on 10-year Treasurys, which is correlated with expectations about where interest rates are headed, was at 4.34% on Thursday afternoon, up from 4.27% yesterday, before closing at 4.329%.
The 2-year yield was up by forty-four basis points before closing at 4.201%.
Stocks To Watch
$Broadcom(AVGO)$ reported fiscal fourth-quarter earnings that topped analysts’ expectations, sending shares higher in extended trading Thursday. The chipmaker saw fourth-quarter revenue grow 51% year-over-year to $14.05 billion, roughly in line with the analyst consensus compiled by Visible Alpha. Net income came in at $4.32 billion or 90 cents per share, up from $3.52 billion or 83 cents per share a year earlier, beating expectations.1 Broadcom underwent a 10-for-1 stock split in July.
As seen from the technical, AVGO has displayed strong positive upside, with it trading above the short-term and long-term MA period, and MACD is giving an upside movement trend,
MTF is also giving a clear signal with strong upward trend, now I am waiting to see if the strong earning from this chipmaker can help to push some of the big names in semiconductor higher, like $NVIDIA Corp(NVDA)$ and Arm Holdings (ARM)
$Warner Bros. Discovery(WBD)$ announced plans to separate its television business from its streaming and film studios. Shares of the media giant skyrocketed 15.4% on the news. The company said it would create two distinct operating divisions: one that encompasses its global streaming platform and film studios, and another concentrated on linear TV. The company's CEO said the restructuring will give Warner Bros. Discovery more flexibility in adapting to the shifting media landscape.
Shares of $MetLife(MET)$ jumped 3.6% as the insurance giant unveiled a five-year growth plan designed to boost profits and free cash flow while lowering expenses. The firm highlighted four areas of opportunity it intends to address under its updated strategy: building on its position in group benefits, leveraging its retirement platform, growing its asset management business; and expanding in international markets.
With a sign that might show a sticky inflation returning, I would think this insurance stock might be a good one to add to the defensive side of my portfolio strategy, from the technical, it does not look like it will have much potential upside especially from MACD.
But we can see that MET is trading above the short-term and long-term MA, and MTF is also gaining some signal to point to a stronger upward trend on the longer term.
So this might make this stock something to hold for defensive strategy.
Summary
Even though the economic data PPI might suggest a sticky inflation, but the probability of a December rate cut is still high, looks like market might have already priced in this last rate cut (if it happen).
So we might want to look at some of the stronger names which might help us to play defensive if inflation were to stick around for a while as we enter into 2025.
Appreciate if you could share your thoughts in the comment section whether you think inflation might stick around and enter into 2025 at least for one quarter?
@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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