After a series of the biggest declines since 2022, contracts on US100 are recovering today. The reason for such a surge is the quarterly financial report of Advanced Micro Devices (AMD.US), which yesterday reported solid results for the second quarter of the year, beating forecasts. The company raised expectations for the next quarter. AMD is being positioned as the company that is likely to become the second after Nvidia to start 'taking over' part of the AI chip market for data centres. In the result, we can see semiconductor companies stocks rising today.
- The nearly 115% y/y increase in revenue from this segment offset weakness in AMD's gaming sector and made the market see such a scenario as viable in the long term. Now Wall Street can again try to 'pick' among companies that will start earning more thanks to the artificial intelligence trend.
- Arista Networks (ANET.US) also showed a great report, with its shares gaining almost 4% today before the US open. The company proved that it continues to benefit from the higher CAPEX of cloud giants and spending on the hardware spree supporting the AI revolution, in data centres.
- Microsoft's Q2 results were very solid, but failed to lift the company's shares to higher levels, due to a challenging valuation (forward p/e of over 30) and market expectations, which 'unofficially' hoped to raise guidance for the next quarters or FY2024;
- Azure revenue rose 30% y/y (at the lower end of the company's forecast, which estimated 30-31% y/y in Q2), and overall sales rose 15% y/y. As a result, we're seeing buyers return to tech company stocks today, especially in the semiconductor sector, with Nvidia (NVDA.US) shares gaining nearly 6% today before the Wall Street open, after yesterday's 7% sell-off.
The stock market is awaiting ADP data from the U.S. private labour market, where employment is expected to change by 150,000 FTEs, roughly in line with the last report. The key event that will raise the volatility of technological equities is the Fed decision (7 PM BST) and Jerome Powell's conference, which will begin around 6:30 PM BST. The baseline scenario is to keep rates unchanged at 5.5%, but a faster cut is not out of the question and would likely support a broader rebound in the US equity market. Investors in Powell's statements will also 'look for evidence' of policy easing in early fall. Postponing a decision and a hawkish Federal Reserve pose could keep more uncertainty on Wall Street.
US100 (D1 interval)
Futures for the Nasdaq 100 Index (US100) are trading up nearly 2% today, maintaining the upward channel. Nvidia, whose shares cheapened by more than 7% yesterday, is trading 5% higher today before the session opened, thanks to AMD's higher-than-forecast results. Other chip companies are also supporting the rebound; including Qualcomm (QCOM.US), Micron (MU.US), Intel (INTC.US) and Broadcom (AVGO.US). An important psychological resistance level remains at 20,000 points. We may also see higher volatility today, following the Fed decision (7 PM BST) and Jerome Powell's conference (7:30 PM BST).
Source: xStation5
