To The Moon

Throughout most of the trading session on Tuesday (04 June), major indices traded lower due to pressure caused by emerging concerns about growth. But we saw mega cap stocks rebounded in the afternoon session which help the indices to close near session highs.

We saw S&P 500 and Nasdaq Composite each closed 0.2% higher, while the Dow Jones Industrial Average rose 0.4%.

Nvidia Standout As A Winner. Microsoft and Apple Contribute As Well

After Elon Musk indicate that Tesla is expected to make $3-4 billion of Nvidia purchases in 2024, this helps $NVIDIA Corp(NVDA)$ close higher to be the standout winner.

Other mega cap like Microsoft and Apple helps in pushing up the session in the afternoon.

NVDA was down 0.8% at its low, MSFT was down 0.9% at its worst level, and AAPL showed a 0.5% decline earlier. The market showed resilience to selling efforts before the rebound in mega cap stocks, supporting the afternoon rally. The S&P 500 was down 0.5% at its low of the day.

Small Cap Underperform. Sectors Suffer Losses.

Small cap stocks underperformed their larger peers throughout the session. The Russell 2000 declined 1.3%, affected by slowdown worries and weakness in energy, materials, and bank stocks. These losses led the S&P 500 materials (-1.22%), energy (-0.97%), and financials (-0.44%) sectors to underperform, logging the steepest declines among the 11 sectors.

Meanwhile, the real estate (+1.0%), consumer staples (+0.93%), and information technology (+0.41%) sectors led the pack.

Treasury Yields Lower Again

In response to Tuesday morning’s data release where we saw decrease in April job openings to 8.059 million from a revised 8.355 million in March, the treasury yields went lower.

The 10-yr note yield settled seven basis points lower at 4.339%, and the 2-yr note yield fell two basis points to 4.785%.

Business Spending Rebounded Modestly

April Factory Orders came in at 0.7%, better than the consensus at 0.6%). The prior was revised to 0.7% from 1.6%. April JOLTS - Job Openings reported at 8.059 million where prior was revised to 8.355 million from 8.488 million.

The key takeaway from the report is that business spending rebounded modestly to start the second quarter following a decline in March.

Stock To Watch

$CrowdStrike Holdings, Inc.(CRWD)$ reported Q1 Non-GAAP EPS of $0.93, surpassing expectations by $0.04. The company's revenue also exceeded forecasts, reaching $921.04M, a 33% year-over-year increase. Annual Recurring Revenue grew to $3.65 billion, with $211.7 million added in the quarter. For Q2, CrowdStrike projects revenue between $958.3M and $961.2M, with Non-GAAP EPS expected to be between $0.98 and $0.99.

You can refer to my previous article where I have provided an analysis on how CRWD would move if the earnings and guidance beat expectations.

Is CrowdStrike A Buy Before Its Quarterly Earnings Report?

GameStop investor Keith Gill, known as Roaring Kitty, is under investigation by Massachusetts securities regulators for his recent trading activities. The scrutiny follows concerns about potential stock manipulation after his recent purchases of GameStop shares. Additionally, Morgan Stanley's E*Trade is contemplating removing him from their platform.

Do expect GME to make volatility trading as I believe there would be more short selling following this news, 24-hours showed there is a modest 1.47% at time of this writing. Do exercise cautious in trading this stock.

$Hewlett Packard Enterprise(HPE)$ shares rose 8% in extended-hours trading following fiscal Q2 results that beat expectations. The company reported adjusted EPS of $0.42 and revenue of $7.2B, driven by a significant increase in AI revenue. For Q3, HPE expects earnings between $0.43 and $0.48 per share and revenue between $7.4B and $7.8B.

$Apple(AAPL)$ shares closed 0.2% higher at $194.35, marking the seventh consecutive day of gains. Despite a 24% gain in the broader S&P 500 Index over the past 12 months, Apple's stock has gained only 8%. Analysts remain divided, with a majority rating it as a Buy or Hold.

If we looked at how Apple have been trading upside, but its improvement have not been significant, considering that MACD is making a downward movement, and the last BUY opportunity is on 30 May 2024, I would think Apple might still make some downside before it actually make a consistent move towards $200.

United Airlines (UAL) is reducing its staffing plans for the year, planning to hire 10,000 new employees instead of the previously announced 15,000. This decision follows a series of safety mishaps and increased scrutiny from the Federal Aviation Administration, which has limited the carrier's ability to add new routes and approve pilots for Boeing (BA) aircraft.

Tesla (TSLA) saw a slight uptick in trading after CEO Elon Musk clarified reports that Nvidia (NVDA) H100 chips were prioritized for X AI over Tesla. Musk explained that the chips would have otherwise remained unused. He also mentioned that the Gigafactory in Texas is nearing completion and will house 50K H100s for FSD training.

$Microsoft(MSFT)$ has invested in Touchcast, a startup focused on caching generative AI queries to improve efficiency. Touchcast is raising $100M from venture backers and deploying its technology across Microsoft's Azure cloud data centers. The initiative aims to reduce the power and energy required for AI models to generate responses.

Their stock price increase yesterday has helped to push the S&P 500 to close in the positive in afternoon session. If we looked at how Microsoft has started to trim the workforce in Azure and also focusing on investing in startup to improve their capabilities in generative AI.

At the current price, Microsoft looked like a potential buy.

Summary

With the help of mega stocks rebound, we saw indices make a recovery in the afternoon session, and this could happen again over this week.

As we could be expecting more news from these mega stocks as they begin to examine their strategy towards generative AI and how they could stay competitive, with Nvidia leading the charge by providing support or partnership.

Appreciate if you could share your thoughts in the comment section whether you think market would see a rebound today (05 June) following mega stocks strong showing in yesterday afternoon session?

@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.