To The Moon

Wednesday market was still hesitating and Initially, the major indices traded slightly higher until selling intensified at 2:00 ET before the Fed Chair speech at 2.30 ET, after which, investors express concerns over the Fed pausing its rate-cut campaign, indicating that rates may remain higher for longer. This sentiment followed the FOMC's decision to cut rates by 25 basis points to 4.25-4.50%, as anticipated. The decision was not unanimous, with Cleveland Fed President Hammack dissenting in favor of maintaining the target range for the fed funds rate at 4.50-4.75%.

S&P 500 declined by 2.95% with 178 points, NASDAQ dropped by 3.56% while DJIA closed over 1,100 points lower to end the session with -2.58%, making DJIA tenth consecutive decline.

Despite the decline some stock managed to recover in the post market and presented long term potential, I will continue to hold onto my Palantir stock as we move into 2025.

Wednesday economic data takeaway from the housing report is the 6.4% increase in single-unit starts, driven by a rebound in the South (+18.3%) following hurricanes. However, single-unit permits, a leading indicator, rose just 0.1%.

Weekly MBA Mortgage Applications Index was -0.7% as compared to previous record at 5.4%.

November Housing Starts came in at 1.289 million compared to the consensus at 1.347 million with the previous revised to 1.312 million from 1.311 million. November Building Permits was 1.505 million compared to the consensus at 1.430 million while the previous was revised to 1.419 million from 1.416 million.

Q3 Current Account Balance also came in at -$310.9 billion compared to consensus at -$283.0 billion with the previous revised to -$275.0 billion from -$266.8 billion.

Job Report and Some More Home Data Expected On Thursday (18 Dec)

We are expecting the Weekly Initial Jobless Claims at 8.30am ET with consensus at 237K where the previous is recorded at 242K and Continuing Jobless Claims is also expected with previous recorded at 1886K.

We are also expected the Q3 GDP - Third Estimate at the same time (8.30am ET) with consensus 2.8% with previous at 2.8% and GDP Deflator - Third Estimate with consensus at 1.9% while previous was recorded at 1.9%.

At 10.00 ET, we are expecting the November Existing Home Sales with consensus at 4.10M with the previous at 3.96M. We are also expecting the November Leading Indicators with consensus at -0.1% while previous was at -0.4%.

We will have the EIA Natural Gas Inventories which the previous was recorded at -190 bcf at 10.30 ET, and then at 16:00 ET, we will be expecting the October Net Long-Term TIC Flows with the previous recorded at $216 billion).

The Economic Projections Suggest Only 50-Basis Point Easing In 2025

The Summary of Economic Projections revealed an increase in the median estimate for PCE inflation and core PCE inflation for 2024 and 2025, while the unemployment estimate was decreased for these years. Additionally, the median estimate for the 2025 fed funds rate was raised to 3.9% from 3.4%, suggesting only a 50-basis point easing in 2025 compared to the 100-basis points projected in September.

Note Yield React Positively To HIgher and Longer Rates

The bond market reacted strongly to the possibility of sustained elevated rates if inflation remains above the Fed's 2.0% target while the labor market stays robust. The 10-year yield, sensitive to inflation changes, rose 11 basis points to 4.519%, and the 2-year yield, sensitive to changes in the fed funds rate, increased 11 basis points to 4.363%.

All S&P 500 Sectors In Decline

Virtually all sectors participated in today's decline. All 11 S&P 500 sectors recorded losses, ranging from 1.4% in health care to 4.7% in consumer discretionary. The equal-weighted S&P 500 declined by 3.0%.

Stocks To Watch

$Micron Technology(MU)$ experienced a significant drop of 12% in its share price following a disappointing fiscal second-quarter outlook. The company's forecasted earnings and sales figures fell short of analysts' expectations, with adjusted earnings projected between $1.33 and $1.53 per share, compared to the $1.92 anticipated. Sales are expected to range from $7.7 billion to $8.1 billion, below the $8.99 billion estimate. Despite the near-term challenges, CEO Sanjay Mehrotra expressed optimism about future growth, particularly in AI-driven markets.

$Tesla Motors(TSLA)$ shares took a hit, declining 7.45% after the Federal Reserve's interest rate outlook suggested fewer rate cuts than previously anticipated, which led to a broader market sell-off. The electric vehicle maker had reached an all-time high before the pressure from rising Treasury yields and inflation estimates caused a downturn. Despite this setback, Tesla remains up over 28% for the year.

$Quantum Computing Inc.(QUBT)$ led gains in the quantum computing sector, surging 47% after securing a contract with NASA. The company's shares have skyrocketed more than 2,500% year-to-date, reflecting strong investor interest. Other quantum computing stocks like $D-Wave Systems Inc.(QBTS)$ and Arqit Quantum (ARQQ) also posted gains, continuing their impressive performance this year.

$Palantir Technologies Inc.(PLTR)$ extended its partnership with the U.S. Army, securing a $400.7 million agreement to enhance the Army Data Platform. This move is part of a broader strategy to leverage data and AI for improved decision-making across military operations. Despite the positive news, Palantir's shares saw a slight decline in post-market trading.

If we looked at how the sell-off have affected Palantir, it did not impact much as Palantir continue to trade sideways only MACD showing a sign of downside movement, but MTF is giving a strong upward trend signal.

This could mean that we could expect Palantir to try for $80 price target in the long term.

Advanced Micro Devices (AMD) participated in a funding round for Vultr, valuing the cloud infrastructure company at $3.5 billion. Vultr plans to use the investment to expand its AI and cloud capabilities, utilizing AMD's technology to enhance its offerings. Meanwhile, competitor DigitalOcean (DOCN, Financial) saw its shares drop by 7% during the trading session.

Apple (AAPL) has halted its plans for an iPhone subscription service, which would have allowed users to pay a monthly fee for their devices. The initiative, initially managed by the Apple Pay team, faced multiple delays and was ultimately disbanded. This decision led to a 1% drop in Apple's share price during midday trading.

Summary

I think the sell-off after 2:00 ET was also limited, we saw some stocks begin to recover in post market. So this might be due to investors taking time to comprehend the message on Fed rate cut campaign.

So I would expect some mixed trading today (19 Dec) as investors might take advantage of the sell off to acquire some good quality stocks. But I would exercise cautious in some of the interest rate sensitive sectors.

Appreciate if you could share your thoughts in the comment section whether you think market would be trading in a mixed mode after Fed rate cut campaign decision.

@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.