To The Moon

We saw the major U.S. indices closed slightly higher on 02 Oct (Wednesday), S&P 500 rose by 0.01%, NASDAQ gained 0.08% and DJIA rose by 0.09%. Russell 2000 declined by 0.1%. These indices was trading close to their previous closing levels throughout the trading session.

This steady performance was led by a recovery in chip stocks, as investors kept a close eye on developments in the Middle East and prepared for key labor market data releases in the coming days. The market remained largely unaffected by ongoing uncertainties in the Middle East, where Israel announced plans to retaliate against Iran.

AI chipmaker $NVIDIA Corp(NVDA)$ rose 1.58% Wednesday, leading broader gains for chip stocks, as the VanEck Semiconductor ETF (SMH) added 1.4% following a steep decline yesterday. Among other large-cap tech stocks, Apple (AAPL) finished slightly higher while Microsoft (MSFT), Meta Platforms (META), Amazon (AMZN) and Alphabet (GOOGL) lost ground.

Among the big movers Wednesday, Tesla (TSLA) fell 3.49% after the electric vehicle maker reported quarterly delivery numbers that fell short of the most optimistic Wall Street expectations. Nike (NKE) shares were down 6.8% after the company late Tuesday withdrew its full-year outlook and said it plans to postpone its upcoming investor day ahead of the company’s transition to a new CEO later this month.

Crude oil futures gained nearly 2%, extending a rally that started Tuesday following news that Iran had launched a barrage of missiles into Israel, spurring concerns about possible supply disruptions.

Muted Response To ADP Employment Change Report

Market saw stocks having muted response to the ADP Employment Change Report for September. The report, which showed payroll growth of 143,000, did not alter the market's outlook on a potential soft landing for the economy.

Wage inflation moderated, and hiring was observed in both goods and service-providing sectors across all geographic regions.

Energy Sector Continued The Gains

The energy sector closed 1.12% higher, driven by rising oil prices. WTI crude oil futures, which traded at $72.41 per barrel earlier, settled 0.7% higher at $70.20 per barrel.

Followed by Information Technology sector gaining +0.59% because of the semiconductor sector exhibited relative strength, supporting the broader stock market. This led the PHLX Semiconductor Index (SOX) to close 1.5% higher. The positive movement also benefited the S&P 500 information technology sector, which rose by 0.6%, bolstered by a gain in Apple (AAPL) shares, which climbed 0.3% to $226.78.

The Consumer Staples and Discretionary sector was the worst performer, closing 0.8% lower. The decline was partly due to a significant loss in NIKE (NKE) shares, which fell 6.8% to $83.10 after the company reported fiscal Q1 results and withdrew its FY25 guidance.

The healthcare sector also lost -0.20% because Humana (HUM, Financial) experienced a notable decline, with shares dropping 11.8% to $246.49 after reporting that only 25% of its members are enrolled in 4-star plans and above, compared to 94% in 2024.

Note Yield Higher

The bond market saw the 10-year Treasury note yield rise by six basis points to 3.794%, while the 2-year yield settled flat to 3.654%.

Stocks To Watch

$SUPER MICRO COMPUTER INC(SMCI)$ was highlighted by Barclays, which adjusted its price target following the company's ten-for-one stock split. Concerns remain over internal controls, filing delays, and competitive pricing pressures, leading to an Equal Weight rating despite the unchanged target multiple.

After the stock split, we are still seeing weakness from the technical, as MACD is going to form a bearish MACD crossover, this is also shared by the MTF which is showing SMCI trading below both short-term and long-term MA, and short-term MA cross under long-term MA indicate that this is a bearish trend moving forward.

I would think we need to be cautious when looking to trade SMCI.

OpenAI, backed by $Microsoft(MSFT)$ , surpassed SpaceX to become the highest-valued private company in the U.S., following a successful $6.6 billion funding round. This positions OpenAI with a valuation of $157 billion, only behind ByteDance globally. The funding will support advancements in AI research and development.

Even with new fundings going into OpenAI, it does not seem to help MSFT, though MTF is showing uptrend, but MACD is showing a downside movement, and MSFT is trading below the short-term MA.

So in the short-term, we might see MSFT trading lower unless we are seeing more development on how this funding round is going to benefit MSFT.

$Novavax(NVAX)$ shares rose 15% after Jefferies expressed optimism about the company's future, highlighting its efforts to ramp up COVID-19 vaccine sales. The company is on track to meet revenue guidance for the upcoming season, with potential partnerships and new vaccine developments on the horizon.

NVAX looks to have a strong uptrend on the MTF and there is a convergence of the short-term and long-term MA, and it is trading way above the short-term MA.

I am looking for NVAX to make another new gap up, so this might be a good time to consider loading this stock if you are into healthcare stocks.

Character.ai announced a strategic shift away from developing large language models to focus on enhancing consumer products. The decision comes as the cost of developing such models becomes prohibitive compared to tech giants like Microsoft (MSFT), Amazon (AMZN), and Google (GOOGL).

Summary

I think market might be seeing a recovery effort from semi conductor stocks gaining strength, but we still need most of the mega cap stocks to show strength. It is good that market show resilience despite worries over the middle east ongoing uncertainties.

I will be focusing to look at Nvidia and Amazon today (03 Oct) because of Nvidia AI chip demand growth as highlighted by its CEO, for Amazon it is the Amazon Prime Day build up.

Appreciate if you could share your thoughts in the comment section whether you think market would show more strength after its resilience today (03 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.