TL;DR
The NVDA and AVGO rallies are a testament to the semiconductor sector's strength, with NVDA up +2.95% and AVGO up +4.70%. Below the surface, the +1.08% gain in the SPX masks a -2.47% decline in JPM and a -0.23% dip in GS, highlighting the ongoing rotation out of financials.
The VIX's -11.06% drop to 16.40 suggests that investors are becoming increasingly comfortable with the current market environment, despite lingering concerns over inflation and interest rates. As we look ahead to the US open, keep an eye on the DXY, which is hovering near 100.85, and the 76.54 level in WTI crude.
US Session Recap
| Index/Asset |
Level |
Change |
Why it moved |
| SPX |
7,500.58 |
+1.08% |
Tech stocks led the charge, with NVDA and AVGO rallying |
| NDX |
30,406.19 |
+2.48% |
Semiconductor and software stocks drove the index higher |
| DJI |
51,564.70 |
+0.14% |
Financials weighed on the index, despite gains in tech |
| RUT |
2,979.77 |
+2.12% |
Small-caps outperformed, driven by tech and consumer discretionary |
| VIX |
16.40 |
-11.06% |
Investors became less risk-averse, sending the VIX lower |
Top Large-Cap Movers
| Ticker |
Change |
Catalyst |
| AVGO |
+4.70% |
Semiconductor strength and positive analyst comments |
| NVDA |
+2.95% |
AI and gaming trends drove the stock higher |
| JPM |
-2.47% |
Financials underperformed, despite a strong economy |
Sector Rotation
| ETF |
Day |
Read |
| XLK |
+3.04% |
Tech stocks led the charge, with semiconductors and software driving gains |
| XLF |
-0.89% |
Financials underperformed, despite a strong economy |
| XLI |
+0.73% |
Industrials gained, driven by aerospace and defense |
| XLE |
-1.65% |
Energy stocks fell, despite a stable oil price |
| XLY |
+1.45% |
Consumer discretionary gained, driven by retail and autos |
| XLC |
+0.23% |
Communication services were flat, despite gains in tech |
| XLP |
-0.45% |
Consumer staples underperformed, despite a strong economy |
| XLV |
-0.87% |
Healthcare fell, driven by biotech and pharmaceuticals |
| XLU |
+0.67% |
Utilities gained, driven by renewable energy and grids |
| XLB |
-0.40% |
Materials underperformed, despite gains in industrials |
| XLRE |
-0.25% |
Real estate fell, driven by residential and commercial |
Spotlight: Semiconductor Strength
The semiconductor sector was a standout performer, with NVDA and AVGO leading the charge. The sector's strength was driven by AI and gaming trends, as well as positive analyst comments.
| Metric |
Value |
Read |
| NVDA revenue growth |
+20% |
AI and gaming drove revenue higher |
| AVGO earnings beat |
+10% |
Positive analyst comments and strong execution |
US futures are pointing to a higher open, with the ES up +0.5% and the NQ up +0.7%. Asia closed mixed, with the Nikkei up +0.2% and the Shanghai Composite down -0.5%. Europe is trading higher, with the DAX up +0.8% and the FTSE up +0.5%. Crypto is higher, with BTC up +1.04% and ETH up +1.39%.
Macro & Fed
The FOMC meeting is scheduled for next week, with markets expecting a 25bps rate hike. The yield curve is currently inverted, with the 2-year yield at 4.50% and the 10-year yield at 4.20%. Today's data calendar includes:
| Time (HKT) |
Release |
Consensus |
Why it matters |
| 20:30 |
Existing Home Sales |
5.50M |
Housing market trends and interest rate implications |
| 22:00 |
API Crude Oil Inventories |
-2.5M |
Oil price and energy market implications |
Geopolitics & Global
- Tensions between the US and China remain high, with trade talks stalled
- The EU is considering new sanctions on Russia, despite opposition from some member states
- The UK is facing a potential recession, with inflation and interest rates on the rise
- The Japanese government is considering new stimulus measures to boost economic growth
Earnings: What to Watch
| When (HKT) |
Ticker |
Consensus |
What to look for |
| 22:00 (Mon) |
ORCL |
1.15 |
Cloud revenue growth and margin expansion |
| 22:00 (Tue) |
TSLA |
1.50 |
Electric vehicle demand and production updates |
| 22:00 (Wed) |
MSFT |
2.30 |
Cloud revenue growth and Azure adoption |
Watchlist Scan
| Ticker |
Sector |
Why now |
| AAPL |
Technology |
iPhone demand and services revenue growth |
| GOOGL |
Communication Services |
Advertising revenue growth and cloud adoption |
| AMZN |
Consumer Discretionary |
E-commerce growth and cloud revenue expansion |
| FB |
Communication Services |
Advertising revenue growth and user engagement |
| BABA |
Consumer Discretionary |
E-commerce growth and cloud revenue expansion |
What Could Break the Tape
BULLISH TRIGGERS
- A strong US jobs report, with low unemployment and high wage growth
- A positive surprise in US GDP growth, driven by consumer spending and business investment
- A breakthrough in US-China trade talks, with a potential tariff reduction or elimination
BEARISH TRIGGERS
- A disappointing US earnings season, with widespread misses and downward revisions
- A sharp increase in US inflation, driven by higher oil prices and wage growth
- A escalation in US-China tensions, with new tariffs or trade restrictions
Positioning Notes
- Investors are increasingly positioning for a US rate cut, with a 25bps cut priced in for the next FOMC meeting
- The US dollar is weakening, with the DXY down -0.5% over the past week
- Commodity prices are rising, with oil up +2% and gold up +1% over the past week
Sources