Stocks keep rising as lower inflation, accelerating growth and strong earnings create a potential “Goldilocks” scenario.

The S&P 500 rose 1 between Friday, July 21, and Friday, July 28. It was the third straight weekly advance, placing the index at its highest level in 15 months. The Nasdaq-100, Dow Jones Industrial Average and Russell 2000 also climbed.

Gross domestic product expanded 2.4 percent between March and June, well above the 1.8 percent reading forecast by economists. The price index also rose less than expected and growth shifted toward infrastructure and factory construction. It’s another sign of the economy shifting from consumption toward business investment.

Perhaps most important, the news seemed to confirm that inflation has peaked without a recession. Investors sometimes describe these conditions as “Goldilocks”: not too hot in terms of inflation and not too cold in terms of employment.

“My base case is that we will be able to achieve inflation moving back down to our target without the kind of really significant downturn that results in high levels of job losses,” Federal Reserve Chairman Jerome Powell said on Wednesday. The central bank hiked interest rates by 25 basis points as widely expected. Policymakers are waiting for more data before deciding on future moves.

The market currently expects no more rate hikes, according to CME’s FedWatch tool. Investors will monitor events like Friday’s employment report and the next consumer price index on August 10 for confirmation of that view.

Several other headlines last week bolstered the positive outlook:

• Durable goods orders jumped 4.7 percent in June, more than triple the estimate.
• Initial jobless claims fell more than expected to their lowest level since February.
• Employment costs rose 1 percent in the second quarter. It was 0.1 percentage point less than forecast, which is potentially good for inflation.

Meta, Alphabet Earnings

Meta Platforms (META) jumped to a new 16-month high after beating earnings and revenue estimates. The social-media giant benefited from strong advertising revenue and improvements to its Reels offering. It also reduced capital-spending plans, spurring optimism about profit margins.

Alphabet (GOOGL) climbed after results from YouTube and Cloud surprised to the upside. That offset worries about the search giant falling behind Microsoft (MSFT) in artificial intelligence (AI).

MSFT, which rallied into its report, slipped after its report. The software giant’s results beat estimates but guidance was light and management revealed higher spending plans.

Intel (INTC) also rallied after strong quarterly results suggested it may be engineering a successful turnaround.

Roku (ROKU) was another big mover, surging 22 percent after its revenue shot past estimates. That spurred hope that the streaming-video platform is gaining advertising dollars more quickly that thought.

Growth Stocks Lead

The rallies in META and GOOGL lifted the communications sector by more than 5 percent. It also kept large-cap growth stocks firmly in the lead. Chinese technology stocks like Alibaba (BABA) also jumped after officials in Beijing pledged to bolster the country’s struggling economy.

Semiconductors, banks and energy outperformed last week. Crude-oil futures (@CL) closed at a three-month high as inventories remained tight and traders positioned for more demand from China.

Solar-energy stocks performed the worst after Enphase Energy (ENPH) and SunPower (SPWR) issued weak guidance.

Airlines fell after Alaska Air (ALK) projected revenue below Wall Street’s estimates. Indications of lower fares and a Pratt & Whitney engine recall also hurt the group.

Overall, the mix of sector performance remained potentially bullish. Risk-on groups gained and safe-havens like utilities struggled.

Charting the Market

The S&P 500 made a new 52-week closing high for the fifth time in the last seven weeks.

The index has shown a pattern of tight sideways consolidation without significant pullbacks since Congress raised the debt ceiling in early June. For example, last week’s low was slightly above the previous week’s low. That low, in turn, matched the previous week’s high.

Combined with surveys showing better sentiment, the small moves may suggest long-term investors continue to enter the market. It could also resemble the price action in 1994 and 1995 as the late 1990s’ bull market took shape.

Wilder’s Relative Strength Index (RSI) shows another potential similarity by remaining near “overbought” readings.

Investors may now view last week’s low of 4528.5 as support. They may eye the March 2022 high of 4637 as the next important level to the upside.

The Week Ahead

This week is packed with earnings, with more than one-third of the S&P 500 issuing results. It also has important economic data.

The main items today are numbers from On Semiconductor (ON), SoFi Technologies (SOFI) and Transocean (RIG)

The Institute for Supply Management’s manufacturing index is due tomorrow morning. Its internal price index, in particular, may be important as an inflationary measure. Advanced Micro Devices (AMD), Uber Technologies (UBER) and Caterpillar (CAT) report earnings.

Wednesday features ADP’s private-sector employment report and crude-oil inventories. Qualcomm (QCOM), Occidental Petroleum (OXY), Shopify (SHOP), Airbnb (ABNB) and PayPal (PYPL) are some of the noteworthy quarterly reports.

Thursday’s big names are Apple (AAPL), and Amazon.com (AMZN). Initial jobless claims are also due.

The week concludes with the Labor Department’s non-farm payrolls report on Friday morning. Traders will likely pay attention to the overall number, plus unemployment and hourly earnings because they can influence the Fed.

The post Stocks Keep Climbing: Has ‘Goldilocks’ Arrived? appeared first on Market Insights.

Semiconductors have outperformed lately as investors get excited about demand from artificial intelligence (AI). Today’s chart considers equipment supplier Lam Research .

The first pattern is the rising 50-day simple moving average. LRCX has consolidated in a tight range around that line during the last three weeks, a potential sign the intermediate-term uptrend remains in effect.

Next, roll back the clock to …

For more, please click here to view the related idea and chart analysis on TradingView.

The post Chart of the Day: Tight Consolidation in Semiconductor Equipment Stock appeared first on Market Insights.

Stocks are trying to bounce as investors await key earnings and hope for slower rate hikes.

The S&P 500 rose 4.7 percent between Friday, October 14, and Friday, October 21. It was the biggest weekly gain since June, with every major sector advancing.

More than one-third of the index’s members report earnings this week, including the four trillion-dollar companies. While profits are growing at the slowest pace in two years, sentiment was already negative because of inflation and economic worries. That can sometimes create the potential for a relief rally as investors look for things to improve.

There could also be less near-term anxiety about the Federal Reserve and higher interest rates.

“We have to make sure we are doing everything in our power not to overtighten,” San Francisco Fed President Mary Daly said on Friday. She added that it’s time for policymakers to start planning slower rate hikes, according to Reuters. Those comments appear less hawkish than her stance in August, when than she said “our work is far from done.”

Energy, Tech Lead the Rally

Energy stocks were the best performers last week, according to TradeStation data. Lower-than-expected oil inventories and strong results from Schlumberger (SLB) powered the move.

Technology stocks also climbed as semiconductor-equipment companies like Lam Research (LRCX) and ASML (ASML) issued strong guidance.

Brazilian stocks continued to advance as President Jair Bolsonaro gained in the polls against socialist Luiz Inácio Lula da Silva. Metal producers also gained as copper giant Freeport McMoRan (FCX) described a “strikingly tight” copper market.

Banks, homebuilders and Chinese stocks were among the worst performers.

Netflix (NFLX) jumped 26 percent after earnings, revenue and subscriber growth beat estimates. It was the biggest move in the S&P 500 and the streaming-video giant’s best week in seven years. Oracle (ORCL) also rallied after predicting revenue will grow about 31 percent over the next two fiscal years.

Charting the Market

The S&P 500 began last week under pressure as prices battled a falling trendline. It then bounced sharply, breaking the trendline and leaving some potentially bullish signals on the chart.

First, the index spent the entire week above its June low of 3637. That could suggest the level remains support.

Prices also closed above the 21-day exponential moving average (EMA), which could suggest the short-term downtrend is ending.

Next, Friday’s low was above the troughs of the previous week and September 30. Some chart watchers may consider that a sign that direction is turning higher.

The Week Ahead

Earnings dominate this week. Some political events could impact the market as well.

First, Rishi Sunak could emerge as the next British Prime Minister as early as today. That could help ease uncertainty about the world’s sixth-biggest economy after the falls of Boris Johnson and Liz Truss.

Microsoft (MSFT) and Alphabet (GOOGL), two of the trillion-dollar companies, report earnings tomorrow afternoon. The session also features consumer confidence and results from names like General Motors (GM), Coca Cola (KO) and Visa (V).

Wednesday brings new-home sales and crude-oil inventories. Boeing (BA), Meta Platforms (META) and Ford Motor (F) are some of the big earnings reports.

Thursday is the busiest day. It begins with the European Central Bank meeting, which is expected to see a 75-basis point interest-rate hike. Combined with a resolution to the British political situation, such a move could potentially strengthen European currencies. That could potentially boost sentiment because the strong U.S. dollar has weighed on corporate earnings.

Other items in the session include the government’s preliminary estimate of gross domestic product (GDP) and initial jobless claims. Apple (AAPL) and Amazon.com (AMZN), the other two trillion-dollar companies, also report earnings.

Personal income and spending are due on Friday morning. The report is potentially important because it includes the Personal Consumption Expenditures (CPE) price index, a closely watched inflation measure. Pending home sales and results from Exxon Mobil (XOM) and Chevron (CVX) are also due.

Two other political stories lurk in the background. Brazil’s elections are scheduled for Sunday, October 30. Further gains by Bolsonaro could potentially lift the country’s stocks. Second, news about the U.S. midterm elections on November 8 could also potentially impact sentiment.

The post Stocks Try to Bounce Before a Huge Week of Earnings appeared first on Market Insights.

Chip stocks are an important part of the market because of their wide use across the economy. Yesterday, a key player gave investors a big shot of confidence in the group.

Taiwan Semiconductor (TSM) gained almost 3 percent after announcing quarterly results. As its climbed, other big names like Intel (INTC), Advanced Micro Devices (AMD) and Nvidia (NVDA) reversed earlier losses and flipped to green.

TSM’s report featured not only better-than-expected earnings and revenue. Management also forecast third-quarter sales of $19.8 billion to $20.6 billion. That was about 9 percent higher than consensus estimates.

“Our customers’ demand continues to exceed our ability to supply,” CEO C.C. Wei said on a conference call. “We expect our capacity to remain tight throughout 2022.”

TSM is important because it’s the world’s biggest semiconductor stock by market capitalization. It’s also No. 2 in revenue behind INTC, according to TradeStation data.

Margins and Demand

One of the takeaways from TSM’s latest quarter was its ability to maintain profitability. Gross margins, the difference between revenue and the manufacturing costs, expanded by 3.5 percentage points from the previous quarter. That suggests that pricing remained strong and little impact from inflation.

The report helped offset worries about slowing weaker demand because of customers amassing big inventories after the pandemic. Even though TSM acknowledged the headwind, management thinks the pullback will be less extreme than feared.

One of the big reasons is that chips continue to advance as they’re used in more complex applications like smart phones and data centers. That prevents them from growing overly commoditized, which in turn supports profit margins. It’s a new dynamic for an industry once dominated by the monolithic PC market.

Semiconductor Stocks

TSM’s bounce followed a dip below $75 last week. It was the stock’s lowest price in almost two years.

Other chip companies have had similar pullbacks. AMD and NVDA recently touched their lowest levels since May 2021. The industry-tracking Philadelphia Semiconductor Index ($SOX) is also down 35 percent from its all-time high earlier this year.

It’s not a surprise, given their sensitivity to the global economy and the Federal Reserve’s interest-rate hikes. But most companies have continued to beat estimates, including Qualcomm (QCOM), AMD and NVDA. Will there be more positive surprises with more numbers expected soon?

Here are some other upcoming names and dates to know:

• ASML (ASML): The Dutch provider of semiconductor equipment reports earnings before the opening bell next Wednesday, July 20.
• Texas Instruments (TXN): The maker of industrial and automotive chips reports after the closing bell on July 26.
• Lam Research (LRCX): The maker of chip-manufacturing gear announces results after the closing bell on July 27.
• Qualcomm (QCOM): The communications-chip company reports after the closing bell on July 27.
• Chip maker Intel (INTC) reports after the closing bell on July 28.
• Advanced Micro Devices (AMD): The semiconductor company issues quarterly results the afternoon of August 2.

The post A Key Semiconductor Stock Just Gave Tech Investors a Boost of Confidence appeared first on Market Insights.

Few industries are more essential to the modern economy than semiconductors. This article will review key companies in the group, which has pulled back significantly during this year’s selloff in technology.

From their earliest use in computers and the space program, semiconductors have spread to countless devices and applications. They are used in everything from smart phones and data centers to cars, appliances and videogame consothe itles. Coronavirus caused shortages in many of these end markets, which some analysts think will boost demand as users rebuild inventories.

Nvidia and Advanced Micro

Nvidia (NVDA) and Advanced Micro Devices (AMD) are the most actively traded chip stocks. They’ve moved to the top of the industry in recent years by focusing on data-center servers. NVDA is also the most valuable U.S. semiconductor company, with a market capitalization of more than $400 billion.

NVDA trades at higher multiples because of its exposure to newer technology. (Its price/earnings ratio is around 50 times. That ranks third in the industry, according TradeStation data.) The higher multiple also caused the stock to fall more sharply as the technology sector declined since late 2021.

Last quarter was a milestone for NVDA because data-center products passed videogame chips for the first time.

NVDA reported 83 percent growth in its data center chips last quarter, but CEO Jen-Hsun Huang warned the graphics chips used in gaming will decline in the current quarter. The shares initially dropped, and then rebounded sharply as investors bought the pullback.

AMD had an even stronger report, with earnings, revenue and guidance cruising past Wall Street’s estimates. The company has more exposure to traditional PCs, although this has been a positive because it’s taken market share from former leader Intel (INTC). Its cloud-server segment grew by 88 percent last quarter.

AMD could also be in focus during its analyst day tomorrow. Margins in particular could be a big driver, according to BofA analyst Vivek Arya, who thinks investors are underappreciating its profitability. Arya rates the stock “buy,” projecting it will rally more than 50 percent to $160 in the next year.

Qualcomm and Intel

Qualcomm (QCOM) and Intel (INTC) are two of the older names in the chip space, although their businesses have gone in opposite directions lately.

QCOM has diversified as it loses business for the Apple (AAPL) iPhone, shifting shift toward Samsung handsets, Internet of Things (IoT) and auto-related products. The company has beaten estimates across the board the last three quarters. It jumped to record highs in late 2021, and has retraced almost all that move this year. QCOM also trades for about 18 times earnings, while the broader chip space is valued at around 28 times, according to data from TradeStation and VettaFi.

INTC, on the other hand, cut guidance last quarter. It also continued to struggle in the PC market as laptop makers switch to AMD’s higher-performing chips. The Dow Jones Industrial Average member is also growing at a fraction of AMD’s speed in the data center market (22 percent versus 88 percent).

The big challenge for INTC is developing and manufacturing new products. Investors have been disappointed with the achievements of CEO Pat Gelsinger since his installation in January 2021. In future quarters, Wall Street will likely watch for signs of a successful turnaround. As a result, it trades for just 8 times earnings.

Industrial Chip Stocks

If NVDA and AMD represent the cutting edge of technology, another group of chipmakers focuses on older markets like automotive and industrial. These less-flashy names also trade at lower valuations, helping them outperform during the recent pullback.

ON Semiconductor (ON), for example, is the top-performing chip stock this year. (It’s down 3.6 percent versus a 13 percent drop for the S&P 500.) ON’s products help manage power for vehicles and industrial systems. The shares broke out to new highs in November and have held above those levels in 2022. That’s a rarity given weakness in the broader technology space. The company, whose earnings have beaten estimates the last three quarters, was also in the news this week after being added to the S&P 500 index.

Analog Devices (ADI) makes chips for applications like clocks, radio transmitters and amplifiers. Earnings, revenue and guidance surprised to the upside on May 18 thanks to strong demand. It’s also benefiting from synergies as management integrates last year’s Maxim acquisition.

Texas Instruments (TXN) is another provider of industrial and automotive chips. It’s drifted in a range for more than a year.

Broadcom and Marvell

Broadcom (AVGO) and Marvell Technology (MRVL) are two other noteworthy semiconductor firms. However both have been less active recently.

AVGO mostly focuses on communications products like cable boxes, fiber optics and data-center networks. It’s currently attempting to purchase VMware (VMW), which provides virtualization software for cloud computing. Because the takeover faces potential antitrust challenges, investors may focus on regulatory developments instead of company fundamentals.

MVRL was a big mover in 2021 as the market focused on its 5G-networking products. It’s drifted this year but attempted to rally following its last quarterly report on May 26.

Semiconductor Suppliers

Other companies supply the semiconductor industry with equipment and software:

• Applied Materials (AMAT) is the largest supplier of chip-manufacturing equipment. It has struggled with weak guidance and U.S. restrictions on business with China.
• Cadence Design Systems (CDNS) provides software for designing and verifying chips. The company beat estimates and guided above consensus the last two quarters.
• Lam Research (LRCX) and KLA (KLAC) make tools and equipment for chip companies. They trade similarly to AMAT.

Aside from the U.S. companies noted above, there are two major global names:

• Taiwan Semiconductor (TSM): The world’s biggest chipmaker by market cap. It’s a contract manufacturer of chips for companies like AMD and NVDA.
• ASML (ASML) is a Dutch supplier of chip-manufacturing equipment. Despite its hefty market cap of $234 billion, it’s not an actively traded stock.

The post Special Report for the Tech Correction: An Investor’s Guide to Semiconductor Stocks appeared first on Market Insights.

Stocks inched to new highs last week, but a resurgence of coronavirus threatens to overshadow all kinds of good news.

“Consumers reported a stunning loss of confidence in the first half of August” because of the delta variant, consumer sentiment economist Richard Curtin said on Friday. He cited worries across “all aspects of the economy,” noting that the University of Michigan’s monthly survey had one of the sharpest drops ever. Its preliminary August reading of 70.2 was the worst since 2011 — a full percentage point below March 2020.

The news represents a 180-degree turn from sentiment a week before, when a strong employment report and hawkish language from the Federal Reserve lifted interest rates and cyclical stocks.

Still, the S&P 500 still managed to climb 0.7 percent and closed above 4460 for the first time ever. Stocks associated with a strong economy, like metals, transports and financials rose the most. Energy was the only major sector to decline.

Record Earnings Season

Last week brought strong quarterly results from companies like Walt Disney (DIS), Tyson Foods (TSN) and Sysco (SYY). With earnings season more than 90 percent finished, businesses have reported some of the most impressive results in recent history.

Profits are up 89.3 percent and revenues have increased 24.9 percent, according to FactSet. That’s the best profit gain since late 2009, and the strongest top-line growth since at least 2008. Profit margins are also the widest on record.

Last week also brought calmer inflation news. The important consumer price index rose at its slowest pace since February as closely watched items like used cars stopped ratcheting higher. The shift toward easing price gains may continue because crude oil declined for a second straight week. (Worries about the delta variant and higher supplies are weighing on energy.)

Good News for Housing?

A new trend away from inflation could potentially keep bond yields (and mortgage rates) lower. That, in turn, for be good news for housing. Homebuilders also gained last week and are the strongest industry group in the last month. They have several important news events this week:

• Tuesday: Home Depot (HD) earnings, NAHB sentiment index
• Wednesday: Lowe’s (LOW) earnings, housing starts/building permits

Blue Chips Keep Climbing

The S&P 500 and Dow Jones Industrial Average both closed at new highs on Friday. Many of the companies leading the advance are prominent blue chips like Johnson & Johnson (JNJ), Goldman Sachs (GS), Microsoft (MSFT) and Pfizer (PFE).

Meanwhile indexes like the Russell 2000 and the Dow Jones Transportation index have gone months without hitting new highs.

Utilities are also quietly advancing and last week closed at their highest level since March 2020. Recent quarterly reports suggest they’re benefiting from higher rates charged to the public. Keep reading Market Insights for more on this trend in coming days.

Powell and Retailers This Week

Aside from the housing events cited above, this week features some importance economic news and earnings.

Monthly retail sales and Walmart (WMT) earnings are due tomorrow morning. Federal Reserve Chairman Jerome Powell will also hold an interactive townhall at 1:30 p.m. ET. It’s not clear whether he’ll discuss monetary policy.

Wednesday features crude oil inventories and minutes from the last Fed meeting. Target (TGT), Nvidia (NVDA) and Cisco Systems (CSCO) release quarterly results.

Thursday’s big items are initial jobless claims, plus earnings from Macy’s (M) and Applied Materials (AMAT).

The post Stocks Inch to New Records But New Coronavirus Fears Threaten the Recovery appeared first on Market Insights.

Semiconductor stocks are breaking out amid a global shortage of microchips. Let’s take a closer look at an industry that’s crushing the market, even with the broader technology sector lagging.

The Philadelphia Semiconductor Index ($SOX) has risen 18 percent so far this year. That’s more than triple the gain of the Nasdaq-100 over the same period, and almost twice the move of the broader S&P 500 index. The industry group hit new all-time highs yesterday. Meanwhile other high-profile names like Apple (AAPL), Tesla (TSLA), Amazon.com (AMZN) and Netflix (NFLX) have been rangebound for months.

A powerful mix of catalysts is driving the trend. Chips have been in high demand for years thanks to mobile devices, videogaming and the cloud computing. Coronavirus fueled even more business as remote workers bought extra laptops and peripherals. Semiconductor foundries next struggled to keep up with orders from carmakers following a brief interruption in auto production. Now, they’re facing a general boom as the economy roars back from last year’s mini-depression.

How good are things going? On Monday, the Semiconductor Industry Association reported sales growth of 14.7 percent in February (the latest month with data). It was the biggest increase since August 2018. The world’s two biggest chipmakers, Taiwan Semiconductor (TSM) and Intel (INTC), are investing more than $120 billion to keep up.

Applied Materials, Lam Research

Those expansion plans have been especially good news for a subset of companies that provide manufacturing equipment. Applied Materials (AMAT) is the largest U.S. player with a market capitalization of $131 billion. It’s also the best performing member of the Nasdaq-100 in 2021, up 66 percent.

Lam Research (LRCX), valued at $95 billion, is next. It’s gained 40 percent since December. Other equipment suppliers include KLA (KLA), ASML (ASML), Teradyne (TER) and Entegris (ENTG).

Intel vs AMD

Another story in the computer-chip space has been the comeback in INTC following years of underperformance. The Dow Jones member rehired former technology head Pat Gelsinger as CEO of the whole company. That’s helped restore confidence in its ability to deliver on newer designs.

The breakout in INTC may have come at the expense of long-time rival Advanced Micro Devices (AMD). AMD stock crushed its larger competitor over the longer term, appreciating 2,700 percent since early 2016 while INTC only rose 93 percent. But since Gelsinger’s appointment, INTC has gained 25 percent versus a 15 percent drop for AMD.

Semiconductor Earnings

Investors may want to keep an eye on semiconductor stocks as they report quarterly results in coming weeks.

Micron Technology (MU) was the most recent to issue numbers. The memory-chip company beat earnings estimates on March 31 after strong demand and tight supplies allowed management to raise prices for DRAM products. (DRAM, or “dynamic random access,” chips are used in countless electronics and gadgets.) MU plans to reduce capital spending, even as enterprise demand surges. That could help support margins.

Investors will get more information in coming weeks when other major companies like INTC, Qualcomm (QCOM), Nvidia (NVDA) and Broadcom (AVGO) report.

Here are some announced and estimated earnings dates for major semiconductors stocks:

Trading Options on Semiconductors

Semiconductors are one of the more actively traded parts of the market. Their stock options are also busy as investors buy and sell their calls and puts.

Because computer-chip companies are related to each other, they tend to move as a group. Traders interested in following semiconductor stocks may want to focus on symbols with the heavy options activity because they offer better liquidity. Here are the 10 busiest semiconductor-related stocks and exchange-traded funds (ETFS), ranked by average daily option volume in the last month.

The post Semiconductors Are Breaking Out. Here Are the Top Stocks For Options Traders appeared first on Market Insights.

A shortage of semiconductors is sweeping the economy as demand for connectivity surges in the wake of the coronavirus pandemic.

Companies including General Motors (GM), Ford Motor (F), Apple (AAPL) and Enphase Energy (ENPH) have mentioned difficulties obtaining chips in their quarterly reports this earnings season. GM said the problem may reduce full-year earnings by as much as $2 billion.

The shortage results from supply-and-demand issues. The initial wave of lockdowns last March and April shuttered car plants. Semiconductor companies reduced production of automotive chips to meet surging demand for PCs as millions of people worked and studied from home. Now, as vehicle sales rebounds, chip factories are struggling to keep up.

“This supply-demand imbalance cannot be remedied with the ‘flip of a switch’,” Falan Yinug of the Semiconductor Industry Association said in a blog post last week. “Making a semiconductor is one of the most complex manufacturing processes. Lead times of up to 26 weeks are the norm in the industry to produce a finished chip.”

Semiconductor Capital Spending

Research firm IHS Markit estimated last week that the current squeeze will last through the third quarter. That means semiconductors are likely to remain one of the most active corners of the market for months into the future.

A takeaway for investors could be to focus on the semiconductor-equipment companies that provide machinery and supplies. Those may benefit most directly as chip makers invest to expand production. Already, giant chip foundry Taiwan Semiconductor (TSM) has pledged to spend at least $25 billion on new capacity this year.

Here are some key semiconductor supplier stocks:

In conclusion, the chip industry was surging even before coronavirus. Like many things tech-related, demand has only improved in the last year. Investors may want to follow some of the companies exposed to the trend.

The post Semiconductor Shortage Squeezes Automakers as Chip Demand Surges Like Never Before appeared first on Market Insights.

The GameStop short squeeze has spread waves of uncertainty across the market, overshadowing major earnings and economic news.

The S&P 500 plunged 3.3 percent between Friday, January 22, and Friday, January 29. It was the biggest weekly decline since October, with 85 percent of the index’s members losing value. The selloff also dragged stocks into negative territory on a year-to-date basis.

The GameStop (GME) short squeeze illustrates how a new generation of investors is reshaping the market. They’re not concerned with established rules or norms. They’re interested in value investing — unlike the growth-focus of many investors. They get information from newer forums like Reddit instead of Wall Street research.

Their interest in heavily shorted stocks spread to other companies perceived as bargains. Theater chain AMC Entertainment (AMC) gained 278 percent. Former tech darling Blackberry (BB) more than doubled before pulling back, while Bed Bath & Beyond (BBBY) ripped 78 percent at one point. Silver and silver miners like Coeur Mining (CDE) could be next on the list.

The excitement seemed to distract attention from strong quarterly results at major companies like Apple (AAPL), Microsoft (MSFT) and 3M (MMM).

GameStop Lifts Retailers

Every major sector fell last week. Energy led the selling with a 6.5 percent drop — its worst week since September — but remains the best performer this year. Solar energy, steel makers, banks and semiconductors fell sharply as well.

Retailers gained the most, lifted by heavily shorted names like GME, Rite-Aid (RAD) and Big Lots (BIG).

Last week’s selloff caused the S&P 500 to break a trend line that began in early November after positive vaccine news drove the index to new highs. It also drove up Cboe’s volatility index ($VIX.X), which could make some investors more cautious.

This week features more key technology earnings and economic news.

The Institute for Supply Management’s manufacturing index is the main item today.

Tomorrow features earnings from major companies like Amazon.com (AMZN), Alphabet (GOOGL) and Alibaba (BABA).

ADP’s private-sector payrolls report and ISM’s service-sector index are the big economic numbers Wednesday. Qualcomm (QCOM), PayPal (PYPL) and eBay (EBAY) are the most prominent companies to announce results.

Thursday brings jobless claims, plus earnings from Snap (SNAP), Ford Motor (F), Pinterest (PINS), Penn National Gaming (PENN), Bristol-Myers Squibb (BMY) and Merck (MRK).

The week concludes with the government’s key non-farm payrolls report on Friday morning.

The post Stocks Turn Negative for Year as GameStop Mania Triggers Big Volatility Surge appeared first on Market Insights.

Technology stocks like Apple just broke a three-week losing streak as investors started to nibble after a sharp pullback.

The Nasdaq-100 rose 2 percent between September 18, and Friday, September 25. Apple (AAPL), Amazon.com (AMZN), Nvidia (NVDA), PayPal (PYPL) and Zoom Video Communications (ZM) led the bounce. Most other sectors fell, handing the broader S&P 500 its longest negative streak in over a year.

Few important things happened on the news front, but incremental positives lifted certain stocks:

• AMZN jumped on an upgrade by Bernstein, amid reports it will hold its Prime day around October 13.
• Smaller social-media companies like Twitter (TWTR) and Snap (SNAP) approached new highs on signs of healthy user traffic.
• Nike (NKE) shot to new record territory after crushing earnings forecasts. Investors also loved its rapid transition to e-commerce.
• Solar-energy stocks jumped on positive results and analyst reports. They remain the year’s top-performing industry by a wide margin.

S&P 500 Holds Potential Support

The S&P 500 started last week by gapping downward, and remained below its previous range. However it also bounced after testing 3215, a potentially important chart level.

The index first held 3215 on January 31 after the first coronavirus pullback. It plunged through that level as the pandemic spread in late February. The price area would then become resistance in June and the first half of July. The same level offered support in late July before stocks broke out to new record highs.

Some technical analysts may also interpret this month’s price action as an “ABC correction.” That’s when a chart is trending higher and runs out of momentum. As it declines, there’s often a second drop to lower levels before buyers return. The S&P 500’s lows on September 11 and September 24 could potentially fit that ABC pattern. (See chart above.)

Housing Strong, Other Data Weak

Last week didn’t have much economic news, but housing data remained strong. New home sales for August rose above 1 million (annualized) for the first time since November 2006. Existing home sales were the highest since December of the same year.

Initial jobless claims, on the other hand, unexpectedly rose. Durable-goods orders also missed estimates by a huge margin.

The crude-oil glut also continued, giving energy stocks their biggest weekly drop (-10 percent) since early June.

Financials also plunged amid reports that major banks including JPMorgan Chase (JPM) had defied money-laundering rules.

Here Come Payrolls

This week brings several big economic reports and the end of the third quarter. There could also be news on another coronavirus-stimulus bill from Congress.

Today is quiet but tomorrow features consumer confidence. Micron Technology (MU) reports earnings after the closing bell.

ADP’s private-sector non-farm jobs report is due Wednesday morning, along with oil inventories. It’s also the last day of the quarter.

Jobless claims and the Institute for Supply Management’s manufacturing index follow on Thursday. Personal income and spending are due as well, along with PepsiCo (PEP) earnings.

The week ends with the Labor Department’s key non-farm payrolls report and unemployment rate on Friday morning.

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