MarketSurge powers the charts in this video.
The dip buyers are not sleeping. The Nasdaq 100 (QQQ) tested its 50-day moving average and bounced quickly. Last week, we saw an uptick in volatility. Some high-momentum leaders, such as PLTR and HOOD, came under pressure; numerous bounces fizzled, and yet, we remain in a bull market:
GOOGL had a big upside gap after it became clear that it wouldn’t have to split the company due to antitrust issues.
Broadcom (AVGO) provided a big upside in revenue guidance after revealing a new ten-billion-dollar client. For the first time in a while, this didn’t lead to a rally in the entire semiconductor space. NVDA pulled back 3%, and AMD dropped 6%. One has to wonder if we have entered an environment where the market is viewing one company’s wins as other companies’ loss of opportunity.
The employment report came below expectations again. June was revised to negative. Interest rates plunged. The odds of the Fed cutting rates have increased. The groups that would benefit the most from lower interest rates outperformed significantly last week – house-related stocks (builders, furniture, mortgage), biotech, and solar.
Financials are also supposed to benefit, but they were slammed on Friday. The reason – unemployment is ticking up, which means more potential losses for banks from clients who stop paying. It makes sense. It is a different question if homebuilders are also going to be impacted – at this point, the market is excited about lower rates and is probably not going to think about the implications before the next earnings season.
Biotech had one of its best weeks this year. Lower rates mean lower cost of capital.
Solar is also highly dependent on rates, but it also has another catalyst going for it. The average price of US electricity has gone up more than 30% in the past four years to 19 cents per kWh. The build-up of AI infrastructure is likely to sustain this uptrend. The cost per kWh (kilowatt-hour) for nuclear is 0.03 to 0.05 cents; for solar is 0.06 to 0.10 cents.
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