Futures moved after a broad decline in stocks during Thursday's trading hours. The Dow dropped over 500 points, ending a six-day winning streak, while the S&P 500 and Nasdaq Composite fell by 0.78% and 0.70% respectively. Tech stocks continued their decline, following its worst session since 2022 the previous day. Chip stocks dropped significantly due to reports of stricter US export restrictions. Concerns were exacerbated by comments from former President Trump, raising fears of geopolitical tensions.
NVIDIA
Shares rose about 3% on Thursday, rebounding after a 7% drop due to geopolitical concerns sparked by comments from US presidential candidate Donald Trump. The recovery came as TSMC reported high demand and constrained supply for high-end AI chips, which it manufactures for Nvidia. TSMC's Chairman, C.C. Wei, mentioned that supply will remain tight through 2025. TSMC also plans to expand overseas, including building a large chip factory in Arizona.
NVDA (H1). The price gapped down from the 126.00 level, the respected supply and demand level for the investors after the stock-split. This stock is considered cheap and we expect the price to return to the 126.00 level.
Johnson & Johnson
Shares of Johnson & Johnson gained nearly 4% after the company exceeded expectations in the second quarter, reporting adjusted earnings of $2.82 per share on $24.45 billion in revenue. Analysts had forecasted $2.70 per share on $22.31 billion in revenue. However, the company lowered its full-year adjusted earnings guidance to $9.97-$10.07 per share, below the consensus estimate of $10.45.
JNJ (Daily). After the triple-bottom was broken in early April 2024, the 155.00 level turned from support to resistance. After nearly 4 months of trading, a solid demand sent this stock above 155.00 and we expect it to target the 162.50 level.
Netflix
The earnings report on Thursday marks the start of earnings season for major media and tech giants. Analysts expect earnings of $4.74 per share on $9.53 billion in revenue. Last quarter, Netflix earned $5.28 per share on $9.37 billion in revenue with a 16% increase in total memberships. Expectations are high due to Netflix's crackdown on password sharing, increased advertising, and strong content slate. Analysts have raised their price targets and forecasts for subscriber additions. Netflix anticipates lower new subscriber numbers this quarter due to seasonality and plans to stop disclosing quarterly additions in 2025.
NFLX (Daily). Profit-taking is normal after Netflix jumped 27.5% over the last 2.5 months. A correction is expected up to 50% of the Fibonacci level at 616.00, which is the likely re-entry buying level for investors.
Fullerton Markets Research Team
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