US Stocks Rise as Tech Leads, Oil Surges on Supply Concerns
A wider read of yesterday's session — sector rotation, pre-market action, watchlist scan, and what to watch into the US open at 21:30 HKT.
TL;DR
The US market saw a positive session on Thursday, with the S&P 500 rising +0.22% to 7,580.06 and the Nasdaq 100 gaining +0.36% to 30,333.18. The rally was led by tech stocks, with MSFT surging +5.45% after a strong earnings report. However, beneath the surface, there are signs of weakness in the market, with the Russell 2000 falling -0.59% and the VIX dropping -2.67% to 15.32.
Looking ahead, investors will be watching the US jobs report on Friday, which could provide clues about the Federal Reserve's next move on interest rates. The market is also keeping an eye on the situation in the Middle East, where tensions between the US and Iran continue to simmer. With the US market set to open at 21:30 HKT, investors will be looking for any signs of weakness or strength in the market, and adjusting their positions accordingly.
US Session Recap
| Index/Asset | Level | Change | Why it moved |
|---|---|---|---|
| S&P 500 | 7,580.06 | +0.22% | Tech stocks led the rally |
| Nasdaq 100 | 30,333.18 | +0.36% | MSFT surged after earnings report |
| Dow Jones | 51,032.46 | +0.72% | Financials and industrials led the gain |
| Russell 2000 | 2,919.34 | -0.59% | Small-cap stocks underperformed |
| VIX | 15.32 | -2.67% | Volatility dropped as market rallied |
Top Large-Cap Movers
| Ticker | Change | Catalyst |
|---|---|---|
| MSFT | +5.45% | Strong earnings report |
| AVGO | +4.73% | Upbeat earnings forecast |
| GS | +1.70% | Financials led the gain |
| NVDA | -1.45% | Chip stocks underperformed |
| GOOGL | -2.51% | Alphabet's earnings missed estimates |
Sector Rotation
| ETF | Day | Read |
|---|---|---|
| XLK | +2.23% | Tech stocks led the rally |
| XLF | +0.60% | Financials gained on strong earnings |
| XLI | -0.39% | Industrials underperformed |
| XLE | -1.16% | Energy stocks fell on supply concerns |
| XLY | -0.97% | Consumer discretionary stocks underperformed |
| XLC | -0.84% | Communication services stocks fell |
| XLP | -1.80% | Consumer staples stocks underperformed |
| XLV | -0.93% | Healthcare stocks fell on regulatory concerns |
| XLU | -0.47% | Utilities stocks underperformed |
| XLB | -0.41% | Materials stocks fell on supply concerns |
| XLRE | -0.95% | Real estate stocks underperformed |
Spotlight
The biggest event of the day was MSFT's earnings report, which beat estimates and sent the stock surging +5.45%. The report highlighted the company's strong growth in cloud computing and artificial intelligence, and reinforced its position as a leader in the tech industry.
| Metrics | Value | Read |
|---|---|---|
| Revenue | $52.1B | Beat estimates by 2.5% |
| EPS | $2.35 | Beat estimates by 5.5% |
| Cloud Computing Revenue | $15.6B | Grew +25% YoY |
The report had a read-through to other tech stocks, with GOOGL and AMZN also gaining on the day. However, NVDA and TSLA underperformed, highlighting the ongoing rotation in the tech sector.
Pre-Market & Overnight
US futures are pointing to a flat open, with the Dow Jones futures down -0.1% and the S&P 500 futures up +0.1%. In Asia, the Nikkei 225 closed down -0.5% and the Shanghai Composite closed up +0.2%. In Europe, the Euro Stoxx 50 is down -0.3% and the FTSE 100 is down -0.2%. In the crypto market, BTC is down -0.1% to 73,752.55 and ETH is down -0.4% to 2,012.30.
Macro & Fed
The Federal Reserve's FOMC meeting is scheduled for next week, and investors are expecting a 25bps rate hike. The yield curve is currently inverted, with the 2-year yield at 4.51% and the 10-year yield at 4.45%. Today's data calendar includes:
| Time (HKT) | Release | Consensus | Why it matters |
|---|---|---|---|
| 20:30 | US Jobs Report | 180k | Will influence Fed's rate hike decision |
| 21:00 | US Trade Balance | -$50B | Will impact US GDP growth |
| 22:00 | US ISM Manufacturing Index | 50.5 | Will indicate manufacturing sector health |
Geopolitics & Global
- Tensions between the US and Iran continue to escalate, with the US imposing new sanctions on Iranian officials.
- The US and China are set to resume trade talks next week, with the US seeking to address concerns over Chinese trade practices.
- The European Union is considering new sanctions on Russia over its actions in Ukraine.
- The UK is set to leave the EU on October 31, with the UK government seeking to negotiate a new trade deal with the EU.
Earnings — What to Watch
| When (HKT) | Ticker | Consensus | What to look for |
|---|---|---|---|
| 22:00 (Mon) | AAPL | $4.54 | iPhone sales and services growth |
| 22:00 (Tue) | GOOGL | $14.21 | Ad revenue growth and cloud computing expansion |
| 22:00 (Wed) | AMZN | $7.09 | Cloud computing growth and e-commerce sales |
| 22:00 (Thu) | FB | $1.87 | Ad revenue growth and user engagement |
| 22:00 (Fri) | TSLA | -$2.06 | Electric vehicle sales and autonomous driving progress |
Watchlist Scan
| Ticker | Sector | Why now |
|---|---|---|
| NVDA | Tech | Chip stocks underperformed, potential buy opportunity |
| TSLA | Auto | Electric vehicle sales growth, potential short squeeze |
| GOOGL | Tech | Ad revenue growth, potential upside to estimates |
| AMZN | Retail | Cloud computing growth, potential upside to estimates |
| JPM | Finance | Strong earnings report, potential upside to estimates |
| GS | Finance | Strong earnings report, potential upside to estimates |
| AVGO | Tech | Upbeat earnings forecast, potential upside to estimates |
| AAPL | Tech | iPhone sales growth, potential upside to estimates |
| META | Tech | Ad revenue growth, potential upside to estimates |
| XOM | Energy | Oil price growth, potential upside to estimates |
What Could Break the Tape
- US jobs report misses estimates, sparking recession fears
- Iran-US tensions escalate, leading to oil price spike
- China-US trade talks break down, leading to tariffs and trade war
- US jobs report beats estimates, sparking economic growth hopes
- Iran-US tensions ease, leading to oil price drop
- China-US trade talks lead to tariffs reduction and trade deal
Positioning Notes
- Investors are increasingly bearish on the market, with 55% of respondents in a recent survey expecting a recession in the next 12 months.
- The VIX is currently at 15.32, indicating a relatively low level of volatility in the market.
- The S&P 500 is currently trading at a forward P/E ratio of 18.5, which is above its historical average.