To The Moon

We saw outperformance from the technology sector which helped to boost major U.S. equities indexes to move higher on Wednesday (04 Dec).

Although Federal Reserve Chair Jerome Powell stressed that the central bank will take a cautious approach to future policy moves, optimism for another interest-rate cut at this month's Fed meeting remained intact. Data released by payroll processor ADP showing a slowdown in private-sector hiring during November supported the case for further interest-rate reductions.

The S&P 500 advanced 0.61%, extending the many record closing highs since last week’s Black Friday trading session. DJIA jumped 0.69% to close above the 45,000-point level for the first time. The NASDAQ gained 1.30% on the strength in the tech sector, also notching its highest-ever close.

This strong performance was driven by impressive earnings results from Salesforce (CRM), which rose 11.0% to 367.87, and positive comments about its Agentforce AI system for enterprises, boosting enthusiasm in the AI sector.

Significant Stock Performance To Note

Shares of customer relationship management software provider Salesforce (CRM) led the S&P 500 higher on Wednesday, popping 11%. Several research analysts lifted their price targets on the stock after Salesforce boosted its full-year sales and profit guidance. Analysts noted that Agentforce, the company's autonomous artificial intelligence offering, has been drawing attention from clients since its October launch.

Over the Black Friday and Cyber Monday weekend, sellers using $Block(SQ)$ ’s ecosystem of commerce tools broke records with 144 million Block consumer transactions globally, a 17% increase from last year.* With over 1 in 3 shoppers more stressed about holiday shopping this year compared to last, customers all around the world turned out in droves for the mega discounting weekend to save on gifts, shopping both online and in-store and driving increased sales on these channels by 21% and 17%, respectively. Deutsche Bank raises target price for Block to $125 From $98. Block was up 6.14% on Wednesday (04 December).

$NVIDIA Corp(NVDA)$ is under scrutiny by the European Commission, which is investigating the company's business practices regarding its GPU products. The inquiry is part of a potential probe into Nvidia's proposed $700 million acquisition of Run:ai. Despite the investigation, Nvidia's shares rose by over 3.5% during afternoon trading. The company plans to open-source Run:ai, expanding its availability beyond just Nvidia GPUs.

If we were to look beyond this kind of scrutiny news, both AMZN and NVDA stocks rallied despite AMZN unveiling new AI-related initiatives, including a new chip aimed to take on Nvidia. But Nvidia stock also posted gains, This is showing signs that investors are betting both tech giants can be winners in AI.

I am holding onto my position of NVDA as there is much potentials for NVDA especially when they are planning to open-source Run:ai, expanding its availability beyond just Nvidia GPUs.

CBOE Volatility Index (VIX) Down Slightly

The fear-gauge CBOE Volatility Index (VIX) was down 0.30% to 13.21. Decliners outnumbered advancers on the NYSE by a 1.24-to-1 ratio. On the Nasdaq, a 1.66-to-1 ratio favored declining issues.

CME FedWatch Show Rate Cut Probability Increase

Investors also digested the U.S. Job Openings and Labor Turnover Survey (JOLTS) report. The JOLTS report showed that job openings increased at a robust pace in October, while layoffs declined to a 15-month low. Job openings jumped to 7.74 million in October, up from 7.37 million in September and higher than the consensus estimate of 7.48 million.

The data came days ahead of the Federal Reserve’s policy meeting on 17-18 December. The chance that markets are pricing went up from 72.9% on 03 Dec to 79.3% chance of 25-basis point rate cut in the FOMC meeting, according to CME FedWatch Tool.

S&P 500 Communication Services and Technology Sector Shined

Mega-cap stocks and semiconductor-related shares led the market, benefiting from renewed AI optimism and positive momentum from the previous week.

The Vanguard Mega Cap Growth ETF (MGK) increased by 1.6% today, accumulating a 3.1% gain for the week. The PHLX Semiconductor Index (SOX) rose by 1.7% for the session, achieving a 4.0% increase since last Friday.

The S&P 500 information technology sector rose by 1.8%, leading among the 11 sectors. The energy sector experienced the largest decline, falling by 2.5% due to decreasing oil prices, which dropped to $68.60 per barrel, a decline of 2.0%.

Note Yield Fell After Weaker-Than-Expected Economic Data

The stocks on Wednesday exhibit positive bias which was contributed by the fell in market rates. The 10-year yield decreased by four basis points to 4.18%, before moving seventeen basis points up to 4.198% at time of this writing.

The 2-year yield dropped by five basis points to 4.12% before coming back up one basis point to 4.148%.

These movements followed weaker-than-expected economic data, such as the ADP Employment Change and the ISM Service PMI for November, reinforcing expectations of a Federal Reserve rate cut by 25 basis points at its December meeting.

Stocks To Watch

$Apple(AAPL)$ is leveraging $Amazon.com(AMZN)$ custom AI chips from its cloud computing unit, AWS, to enhance its machine learning capabilities. Apple's senior director of machine learning and AI highlighted the long-standing partnership and the significant efficiency gains in AI workloads. The company is also considering Amazon's new AI chip, Trainium 2, for pre-training models, indicating a deepening collaboration between these tech giants.

As Amazon planned to take on Nvidia with its new chips, but investors see both of them as winners, so this might create a clear path of who would eventually become the winners of the AI race.

From the technical, we are seeing early December, bullish MACD crossover happen and since then, we are seeing AMZN break out from its short consolidation and we are seeing AMZN trading comfortably above the short-term and long-term MA,

This has also been confirmed by MTF which give a clear strong upward trend, so I am expecting the strength from AMZN to continue to help S&P 500 consumer discretionary sector as well.

I am holding onto my AMZN position as this stock would be the next one to scale bigger market cap with the strategy that they are going with custom AI chips.

$ServiceNow(NOW)$ , which also offers AI solutions to help automate business processes, announced an expansion of its partnership with Amazon (AMZN), further integrating ServiceNow's platform with Amazon's Web Services and Bedrock generative AI capabilities. ServiceNow shares surged 6.2% on Wednesday, while Amazon shares were up 2.2%.

This is another AI software stock which I would love to have in my portfolio, because I have been watching it since it trades in a consolidation sideways, now we have a clearer picture of where NOW would move with the partnership with AMZN, it also give a bullish MACD crossover yesterday.

This is also confirmed with a strong upward trend from the MTF. I would be looking to add this stock.

Bank of America's commodities team reduced its lithium price outlook. Analysts noted that, even as high-cost producers of the key battery mineral scale back their operations, surplus conditions are likely to remain in the lithium market over the next two years. Shares of Albemarle (ALB), the world's largest lithium miner, fell 5.9%.

Summary

I would think consumer discretionary sector would continue to move higher with some more names coming up with their earnings like Lululemon and also there will be another AI software on SaaS business model like UiPath, this should help to move the technology sector higher as well.

Appreciate if you could share your thoughts in the comment section whether you think market would trade in positive bias with strength from technology sector.

@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.