To The Moon

After two straight days of gains which saw the U.S. major indexes back near their all-time highs, the stock market start to experience mixed trading throughout the session. The major indices was fluctuating above and below their previous highs before S&P 500 and DJIA closed Thursday (06 Feb)’s session less than 1% away from its all time close highs while NASDAQ was slightly 2% below its record close.

Stocks are coming off of two winning sessions after a rocky start to the week, as concerns about the possible impact of U.S. tariffs have subsided, while quarterly corporate results have been generally strong.

Market was show a lack of clear direction which could be due to the absence of strong conviction from either buyers or sellers. However, a late surge in buying, particularly in mega-cap stocks, helped the S&P 500 and NASDAQ close near their highs.

Despite the late buying surge, market breadth remained negative at the close. Decliners slightly outnumbered advancers at the NYSE, and the ratio was 11-to-10 at the Nasdaq. Significant price movements were largely seen in stocks that reported earnings.

Labor Data Suggest Stable Market Despite Hiring Slowdown

The labor data report indicates no significant increase in initial jobless claims, suggesting a stable labor market despite a slowdown in hiring activity.

We saw Weekly Initial Claims came in higher at 219K compared to consensus which was at 213K with a previous revised to 208K from 207K. Weekly Continuing Claims also came in higher at 1.886 million than the previous which was revised 1.850 million from 1.858 million.

Other economic data saw a rise in productivity which may help alleviate inflation pressures. Q4 Productivity-Preliminary was higher at 1.2% compared to consensus at 0.8% while the previous was revised to 2.3% from 2.2%.

We also saw Q4 Unit Labor Costs-Preliminary higher at 3.0% compared to consensus at 2.6% with a previous that was revised to 0.5% from 0.8%. The current business cycle's annualized productivity growth rate of 1.8% exceeds the previous cycle's 1.5%.

Economic Data On Friday (07 Feb) To Watch

At 8:30 ET, we will be looking at the January Nonfarm Payrolls, Nonfarm Private Payrolls, Average Hourly Earnings, Unemployment Rate, and Average Workweek.

At 10:00 ET the data from Preliminary February University of Michigan Consumer Sentiment and December Wholesale Inventories would give us an idea of how consumer and retail sales and stocks is doing in 2024.

At 15:00 ET we will have an idea on how U.S. consumer credit spending is doing with the December Consumer Credit data.

Significant Stock Movement and S&P 500 Performance

Apple (AAPL) was a key beneficiary, recovering from a 0.9% decline to close up 0.3% at 233.22. The afternoon climb was not driven by any specific news but rather an ongoing tendency to buy on weakness, coupled with short-covering activity.

Other positive stocks move where several stocks reached new 52-week highs, Phillip Morris (PM,Financial) climbed 11.0%, and Hershey (HSY). These stocks have helped the consumer staples sector to gain 0.88%.

Tapestry (TPR) surged 12.0%, Ralph Lauren (RL) increased 9.7%, Both of them have helped consumer discretionary sector to gain 0.45%.

Information Technology sector was helped by gain from $Palantir Technologies Inc.(PLTR)$ and $SUPER MICRO COMPUTER INC(SMCI)$ which gained 9.79% and 7.46%, the sector gained 0.66%.

Qualcomm (QCOM) fell 3.7% sparking selling interest in other semiconductor stocks. Ford Motor (F) dropped 7.5% and Skyworks Solutions (SWKS) plummeted 24.7% to 65.60, both hitting new 52-week lows due to earnings results.

Note Yield Was Mixed

The bond market saw the 10-year yield settle 2.30% lower at 4.44%, while the 2-year yield increased by three basis points to 4.21%.

Stocks To Watch

$Amazon.com(AMZN)$ reported impressive Q4 results, with GAAP EPS of $1.86 surpassing expectations by $0.38. The company's revenue reached $187.79 billion, marking a 10.5% year-over-year increase. Notably, the AWS segment saw a 19% growth in sales, contributing significantly to an operating income jump from $13.2 billion to $21.2 billion. The North America segment also showed robust performance with a 10% sales increase to $115.6 billion. Amazon's guidance for Q1 2025 projects net sales between $151.0 billion and $155.5 billion.

I am glad that I got into Amazon (at around $173) during the last sell-off in August 2024, this trade have prove to be a considerable successful one, as Amazon have been trading above $190 since then. Though we saw Amazon drip 4.05% after its earnings, but we need to look beyond the short-term AWS segment slower growth.

Moving forward, I think there will be more demand for AWS as Amazon have proved that they are matured enough and effective enough to support organization AI strategy.

Ford Motors (F) faced a challenging trading session due to its conservative FY2 outlook, which highlighted ongoing losses in its EV unit. Despite strong commercial and hybrid sales, the company is grappling with tariffs on Mexico and Canada, which could impact profitability. Ford's focus on expanding its EV segment continues to be a point of concern amid competitive pressures.

$Affirm Holdings, Inc.(AFRM)$ posted a significant earnings beat for FQ2, with GAAP EPS of $0.23 exceeding expectations by $0.40. Revenue surged 46.6% year-over-year to $866.38 million. The company's financial outlook for the fiscal year remains strong, with projected revenue between $3.13 billion and $3.19 billion, indicating continued momentum in its business operations.

AFRM moved 13% after its earnings and this is clearly show in the technical as the bull have been trying to keep the daily uptrend and attempting to make the daily uptrend expansion.

With the earnings propel AFRM by 13%, the bulls attempt for expansion have worked but we need to be aware that if there is any correction the defense level would be around $60.

This is a just in case scenarios.

$Cloudflare, Inc.(NET)$ delivered solid Q4 results, with a 26.9% year-over-year revenue increase to $459.9 million. The company's strong fundamentals justify its premium valuation, as it continues to show early signs of reacceleration in its growth metrics. CloudFlare's focus on expanding its product offerings remains a key driver of its market position.

Summary

I think the market would be trading mixed initially while waiting for the consumer data, and we could see sector like consumer staples continue to benefit if the data turned out to be positive, and als a stronger payroll data might almost cement that Fed would consider the economy strong and they might revisit the rate cut decision.

I will be still looking out for opportunities in the AI space and also some smaller tech related stocks.

Appreciate if you could share your thoughts in the comment section whether you think market would continue trading in mixed mode with positive bias.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.