Stocks rebounded on Thursday, with positive labour data boosting confidence after a sharp sell-off earlier last week. The S&P 500 rose 2.3%, the Dow gained 1.76% and the Nasdaq increased 2.87%. Weekly jobless claims were lower than expected, helping ease concerns about the labour market. The 10-year Treasury yield hit 4%, aided by a weaker Japanese yen. Despite the rally, major indices remain down for the week. These are our stock picks of the week:
DELTA AIRLINES
Delta Airlines reported a $550 million loss due to a recent outage caused by CrowdStrike, which led to the cancellation of 7,000 flights. The financial impact includes $170 million in recovery expenses and $380 million in revenue loss from customer refunds and compensation. Delta's fuel costs decreased by $50 million due to cancelled flights. The outage, affecting millions of Windows machines, was particularly challenging for Delta. The US Department of Transportation is investigating the airline's response, as 1.3 million customers were impacted. Delta is seeking damages from CrowdStrike and Microsoft.
DAL (Daily). Since the Windows blue screen crash on July 19, the stock price has not seen a significant recovery. Delta Airlines has suffered a rough decline to the support level of 37.00. Since the airline operations have resumed, buy now and aim for 44.00, the original price before the incident.
NVIDIA and MICROSOFT
Retail investors bought heavily into the market dip this week, focusing on technology stocks. Data from JPMorgan shows that individual traders were net buyers on Tuesday and Wednesday, purchasing $302 million worth of stocks, compared to a net sale of $2 billion the previous week. This buying spree came after a global market rout on Monday, fuelled by recession fears and unwinding hedge fund trades. Despite the sell-off, the bull market seems intact, as the S&P 500 has since regained much of its losses and is only down about 0.8% for the week. Investors targeted stocks like Nvidia and Microsoft, with $552 million and $471 million in retail flows respectively.
NVDA (H1). The stock entered a bearish momentum since 132.00 followed by the plunge of major stocks. However, we see the bearish projection line indicating that the price is trying to regain its strength. Opportunity to buy if the price breaks the line around 112.00.
MSFT (Daily). The correction happened even before the major stocks plunged and Microsoft fell almost 20%. Rebounding from its key support at 390.00, investors confidently bought the dip. We are looking at the next price target around 430.00.
Fullerton Markets Research Team
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