Investors have been more optimistic lately after the Fed indicated the next move is unlikely to be a hike, pointing to a cap on interest rates that could be bullish for equities. A strong earnings season, as well as some softer labor data, have also bolstered confidence in the stock outlook.
Stocks were on pace for a winning week as of Thursday’s close. The Dow has gained 1.8%. The S&P 500 and the Nasdaq Composite were higher by 1.7% and 1.2%, respectively.
Fresh weekly jobless claims data came in at the highest level since August, raising expectations that central bankers might cut interest rates at some point this year. A bit of softness in the data gives the Fed a window to follow through with its dovish bias. The Fed and the bond market have given a green light together to buy risk, or continue to buy risk.
We expect a renewed fall in U.S. inflation in the coming months. Investors are expecting April’s Consumer Price Index (CPI) to show that the trend toward slowing inflation, which was interrupted in the first quarter of the year is resuming.
Apple: Bullish on advancements in their M4 chip
Apple's dedication to pushing the boundaries of its own silicon is indeed remarkable. The advancements in their M4 chip, particularly with the integration of an advanced Neural Engine, open up a world of possibilities for AI-enabled functionalities. The prospect of isolating subjects from backgrounds in 4K video within Final Cut Pro, as well as utilizing AI for tasks like document detection and image enhancement, showcases the potential for seamless integration of AI into everyday creative workflows. This not only streamlines processes but also enhances the overall quality of output, promising a more efficient and sophisticated user experience.
AAPL (Daily). The news effect brought this stock through the Resistance level last week, failing to push higher. Apple is trading within the 178.40 and 190.30 channels.
Disney: Slightly bullish as selling is overdone
The selloff in Disney following its earnings might indeed be overdone. Concerns regarding theme park operating income growth could be overlooking some important nuances within Disney's guidance framework. It's possible that the market reaction is focusing too heavily on one aspect of Disney's business without considering the broader context or potential mitigating factors. Further analysis of the company's earnings report and guidance may reveal underlying strengths or opportunities that the market has overlooked in its initial reaction.
DIS (Weekly). After a winter season of the last 2.5 years, Disney is finally getting its momentum back in 2024. Last week's correction only offered investors a better deal at near $100 per share.
NVIDIA: Bullish as benefited from AI PC
The adoption of AI in personal computing is poised to benefit various companies, including NVIDIA (NVDA). As AI-enabled devices become more prevalent, they are likely to require memory spec upgrades, which will create opportunities for memory vendors. This demand for memory upgrades nicely complements the memory industry's already strong leverage in the data center, where AI applications often require significant memory resources. NVIDIA, with its expertise in AI hardware and software solutions, stands to benefit from the increased adoption of AI in PCs, while memory vendors like Micron Technology could see increased demand for their products as AI-driven devices require more advanced memory capabilities.
NVDA (Daily). Major corrections in March and April, AI momentum returned in May. The chart shows the number of Buyers pushing up the price significantly and ready to break the 900 level again.
Fullerton Markets Research Team
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