Wall Street is kicking off a critical trading week with stocks bouncing back from last week's slump.
We see semiconductor stocks catching a break and extending yesterday's gains as major names linked to the AI infra build out regained much needed ground and still a major test does lie ahead.
Oil prices are higher as tensions in the Middle East flare up.
And at the same time, more than 80 S&P 500 companies, including giants like Alphabet, Tesla, Intel, and IBM are reporting earnings this week.
Can these big tech profits justify today's high stock prices and keep the rally going?
Well, joining us this morning to weigh in here at the New York Stock Exchange is Michael Ryan King, senior market strategist at the NYSE.
Michael, good morning.
Thank you so much for joining us.
Morning, Remy.
Thanks for having me back.
Well, this morning we are looking at big tech as well as the semis higher, but this does come on the sell-off we saw last week.
So where are we right now?
Yes, so I mean we're really in this period where we've had this kind of unwind of. we've seen the leadership kind of throughout this year, you know, the semis and the memory stocks have really come under some pretty significant pressure over the last couple of weeks, and we're now trying to kind of stabilize is what I'd kind of call it at this point.
We saw overnight in Asia you had South Korea and the Nikkei were both up over 3% yesterday that trade tried to bounce kind of early yesterday.
We kind of Faded a bit throughout the session, um, you know, tech did outperform, but you know, we, we, you know, saw kind of pretty significant gains at the open, you know, which, which did fade a bit, um, you know, the neo clouds and the data center companies were, were some of the best performing yesterday after you had kind of a couple of new, you know, kind of, uh, you know, you know, um, deal announcements, you know, kind of, and, um, you know, kind of, uh, you know, for, for kind of a generation going forward, right, so you know, you saw that sector kind of really significant.
Rebound.
You're seeing a little bit more of that this morning after Nvidia kind of announced a nevious kind of a 9% nevious stake as well, right?
So you're seeing kind of tech trying to stabilize, but I think the big story kind of right now is really earnings.
Yes, and speaking of earnings, we heard from the big banks last week and all eyes are on the MAG 7 names which start reporting tomorrow after the closing bell, but it is also about focus on semiconductors as well.
Hyperscaler.
So since we are heading into tomorrow's session, what are your expectations?
Yes, yes.
So you know, look, the financial earnings that we've seen kind of in the first week were very strong, strong trading, strong investment banking.
Everybody kind of suggested there was a pickup in loan growth, really no real red flags in terms of credit quality.
So all things considered, the financial numbers were pretty strong. today we're starting to see some more of the industrial.
Names you kind of starting to report.
TripleM had a beaten raise quarter, stocks trading pretty significantly higher in the pre-market.
General Motors also had pretty strong numbers, you know, and then you know we're kind of elsewhere.
I think one of the big themes that we've seen, we got it last week with the IBM pre-announcement overnight we had Calex also call out the increase in memory costs and how that's impacting their gross margins.
Suggested that they're going to actually start to announce some surcharges on contracts going forward, right?
So that's something to pay attention to.
I think that's a theme that we're going to continue to kind of hear throughout the throughout this quarter and then as you kind of pointed out, we get into some of the hyper scales you kind of over the next couple of days and then into next week, um, you know, everybody's kind of listening to you know kind of what their commentary is around.
You know, kind of, kind of capE spending and where that's kind of where that's going if there's any suggestion of a slowdown, um, you know, we're we're we're listening to hear, you know, kind of whether we get an official announcement from, you know, kind of a meta as to whether or not they're going to start, you know, kind of trying to sell some of their excess compute capacity in the near term, right, so you know it's, we're still on a little bit of shaky ground in terms of, you know, kind of sentiment, um, you know, but like in general, right.
I think the expectations are for earnings, particularly within that technology sector, to continue to be very strong.
Yes, all of us will be paying close attention to the earnings calls following the report for sure.
But another area we're paying attention to is geopolitics.
So we are looking at oil prices creeping higher yet once again.
WTI this morning recovering 85 and Brent above 91 a barrel.
So that does add to uncertainty, especially.
We head into next week's Fed meeting.
So how are you looking at the inflation picture?
Yes, so I mean it's, you know, the geopolitical situation is kind of, you know, very dynamic, right?
Over the weekend we had, you know, a continued escalation in kinetic activity.
Yesterday we saw oil prices back off a little bit, you know, kind of on reports of a potential 10 day ceasefire.
You know, Iranian officials are supposedly or reportedly kind of meeting in Pakistan currently.
But we are seeing kind of prices move, you know, continue to kind of creep higher again, you know, we've also got kind of the Ukraine, an escalation in kind of the Ukraine and Russia situation which is, you know, continuing kind of in the background.
You know, we've seen, you know, interestingly enough, you know, yesterday, you know, despite the move higher in oil, treasury markets kind of remained in check.
That being said, we're kind of hovering right around kind of recent highs, right, so it doesn't take.
You know, kind of much to really start to see, you know, kind of, um, Treasury yields start to move higher here.
Look, I mean last week, you know, we had the better than expected inflation data that probably takes, you know, some of the pressure, you know, kind of off of the Federal Reserve as we head into next week in terms of an immediate, um, you know, kind of rate hike, right, which was being suggested by Fed Waller.
That being said, I would continue to, I, I.
Continue to expect you know kind of Fed Chair Warsh to kind of continue to strike a hawkish tone, right?
I think you know there's maybe a little bit of overcompensation at this point, you know, really trying to show the public that they are kind of dedicated to this inflation front, this inflation fight, right, and that they have independence, you know, kind of from the White House.
So there may be a little bit of kind of overcompensation in terms of the Commentary coming from the Federal Reserve at this point, but I'd expect this to be on hold next week, probably some hawkish commentary, though we've seen a little bit of improvement on the inflation.
Yes, and I think it's also important to look at yields at this point.
We're looking at the tenure right around the 4.6% level in New York morning trade as we count down to next week's Fed meeting.
But what technical levels are you watching as we head into The rest of the summer, yeah, I mean, so from a treasury market perspective, right, that 46 is pretty kind of pretty important.
You're kind of watching the 30 year yields, you kind of also kind of testing kind of recent, recent highs, you know.
I think we can handle a little bit higher rate environment.
It's more about the pace of that of that increase.
If we kind of creep slowly higher, I think markets can digest that given the kind of overall.
Economic backdrop is still pretty strong.
If it starts to get disorderly, that's where kind of equity markets get, um, you know, kind of a little more concerned in terms of kind of broader equity markets, right?
We're kind of sitting right at this 50 day moving average, right?
So we've been, you know, we kind of broke below that um yesterday.
It looks like we're going to kind of reclaim that around the open, um, you know, on the open today based on where futures are, um, you know, we'll see if we can.
Kind of hold that level.
I think it's around 74, 65, I think is uh you know kind of right around where the S&P 50 day is right if we kind of break, you know, kind of those recent lows that that opens up a move, you know, kind of down into kind of the 100 day moving average, right?
So I think it is a pretty kind of key level to pay attention to, you know, kind of at this point.
Well, a lot of moving parts as always.
So thank you so much for weighing in, Michael.
Appreciate your insight as well as your perspective.
Thank you.
Thanks for having me.
