What Was That All About
Both Biden and Trump were semi-destructive on Wednesday.
And right when the rally broadens in an explosive and meaningful way semiconductors pull back, and hard. That’s geopolitics: unpredictable.It made for tech stocks’ worst day of 2024.
The Dow Jones Industrial Average, which includes Intel $INTC but no other semiconductor stocks, posted a 0.62 percent gain.
The S&P 500 was off more than 1 percent and the Nasdaq Composite more than 2 percent on profound weakness for other chip makers in the aftermath of comments about the US and Taiwan by Donald J. Trump in an interview with Bloomberg BusinessWeek.
There’s also the fact that the Biden administration is weighing new trade rules to restrict transfer to China of technology by manufacturers of critical chip components and systems.
Here’s something bullish besides the Dow’s performance: Even though it was down 0.76 percent the Russell 2000 outperformed both the S&P and the Nasdaq, amid a broader rotation from tech to other sectors and industries.
In the context of what technical analysts would call a “breadth thrust” the hopeful position is that this semiconductor selloff proves to be but a scratch and that expanding participation does indeed reflect a healthy underlying economy.
The stock was down 1.35 percent on Wednesday but is up 46.53 percent over the past 12 months and 32.99 percent year to date.
NFLX traded as high as $697.49 intraday on July 5. Its all-time closing high is $691.69, set on November 17, 2021.
From the Research Desk, we hear that Morgan Stanley $MS analyst Benjamin Swinburne has reiterated his “buy” rating and upped his 12-month price target from $700 to $780.
Swinburne did note that much of what drives NFLX is well known, with upside largely priced in, though there is still plenty of room for growth.
An unknown is the impact of artificial intelligence: “The potential for AI tools to dramatically reduce the barriers to entry in premium, professional video come to mind in this regard.”
Nevertheless, Swinburne sees NFLX trading about 20 percent higher a year from now.
Seems to me realizing this and any more upside is going to be about subscriber growth, simple as that.
Well before we hear from Netflix – at 8:30 a.m. ET – we’ll be eyeballing unemployment insurance claims data for the week ended July 13.
The thing here is confirmation of a cooler but still healthy labor market. Initial claims have settled down from a seasonal spike, while continuing claims remain somewhat elevated.
The major trend remains higher from here.
Yes, it’s been explosive lately, but it’s the healthy kind of explosive we often see in July, and Wednesday was about politics.
Let’s not even try to make sense of its American iteration right now.
