The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Chips
Semiconductor stocks took a beating today and led the broader market lower. The Semiconductor index lost about 5% today, as analysts soured on the results from Taiwan Semiconductor. Despite beating expectations and raising guidance, the market bristled at the increased capex over the next few years. The S&P 500 opened down small and almost recovered to unch’d before giving out and leaking value from about noon to close. The yield curve helped equity bears, with 1-2 bips of yield increases across the curve. Crude didn’t change much as the US/Iran headlines revealed little new news to markets. Precious metals dipped a bit, as did Bitcoin. The Dollar strengthened small. Capital flow was light yet again, hitting 92%.
Earnings reports continue to beat and reporting stocks are tending to do well, see below…
26 S&P 500 stocks reported
25 beat EPS estimates, 0 missed, 1 met
Beta-adjusted:
but the narrative for earnings season is not established. The attitude of the season so far is one of caution. The lesson of Taiwan Semiconductor is that even if the results are stellar and the outlook is rosy, investors may still have a bone to pick with the situation. It could be that the various landmines of disappointment that investors fret, aren’t obvious ones like revenue and guidance. It may be that there are situations where the moods and vibes of the investors just will not allow for a positive stock reaction. It may be that investors are simply looking for excuses to sell certain stocks. TSC seems to be the first example.
If the semiconductor stocks bounce back in the next day or two, I think today’s nervous equity outlook changes to confidence. That means the dip-buyers need to go to work, first in the semis and then in the broader market.
There are only a handful of announcements remaining in the week so perhaps we need to wait for the big wave of earnings reports to either get the bulls inspired or get the bears raiding.
86 stocks in the S&P 500 announce next week.
See you tomorrow.
-Mike
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