To The Moon

On Tuesday, 06 May, we saw another day of declines in the stock market, this is due to the selling pressure across the board hitting major indices.

The S&P 500 decreased by 0.77% while the NASDAQ saw a 0.87% dip, primarily attributed to consolidation activities. DJIA was the largest lagger, down by 0.95%.

The renewed concerns about tariffs and cautious corporate forecasts are contributors to the downturn. We are seeing Ford (F) and Mattel (MAT), despite surpassing Q1 earnings forecasts, refrained from providing comprehensive annual guidance. Ford cautioned about a potential $1.5 billion reduction in profits due to tariffs, whereas Mattel pointed out the unstable macroeconomic conditions and indicated plans for toy price hikes.

Tariffs Fears Reignite With Pharma Tariffs Plan Announced

President Trump announced plans to introduce upcoming pharmaceutical tariffs, expected to be revealed in approximately two weeks.

With the U.S. trade deficit in March that reached $140.5 billion, spurred by a surge in imports, notably including a $20.9 billion rise in pharmaceutical imports, this pharma tariffs announcement is causing fears to reignite once again.

We are also hearing Treasury Secretary Bessent mentioned during an oversight hearing on Capitol Hill that several trade agreements might be disclosed as soon as this week, and completion of up to 90% of these deals could occur by year-end.

These remarks does not seem to outweigh the tariffs fears, and market react instead to the fears with selling pressure.

U.S. Trade Deficit Expanded in March

The U.S. trade deficit expanded to a record-setting $140.5 billion in March, exceeding the anticipated $127.5 billion, and surpassing the revised February deficit of $123.2 billion. This increase was primarily due to March exports surpassing those of February by $0.5 billion, alongside a $17.8 billion rise in imports.

Significant was the surge in consumer goods imports, which increased by $22.5 billion, with pharmaceutical preparations leading the charge with a $20.9 billion uplift.

Healthcare Sector Biggest Loser After Pharma Tariffs Announcement

We only have two gainers in the S&P 500 sectors, which came from Utilities (up 1.23%) and Energy (up 0.30%). The rest of nine sectors was down between 0.17% to 2.76%, which Health Care sector suffered the bigger loss after President Trump announced plans to introduce upcoming pharmaceutical tariffs, expected to be revealed in approximately two weeks.

We are not seeing any positive earnings helping the other sectors as well, and consumer staples being a traditional defensive sector did not help lift the sentiment.

Note Yield Declined As Treasuries Benefit With Gains

Meanwhile, Treasuries benefited from gains, with the 10-year yield declining by four basis points to 4.31%, and the 2-year yield dropping five basis points to 3.79%.

Stocks To Watch

$Advanced Micro Devices(AMD)$ reported impressive first-quarter results, with a Non-GAAP EPS of $0.96, surpassing expectations by $0.03. The semiconductor company achieved a 36% year-over-year revenue increase to $7.44 billion, beating forecasts by $320 million. AMD's data center segment was a significant contributor, with revenue jumping 57% year-over-year. The company anticipates second-quarter revenue of approximately $7.4 billion, plus or minus $300 million. Shares of AMD rose 6% following the announcement.

With the impressive quarterly earnings, we can see that the bulls have gotten back the control as AMD have been trending near the 98 price level of a previous higher low, and the bulls could have a better chance of making a daily uptrend continuation.

I would monitor how the RSI would continue to build momentum towards overbought region and we should be seeing AMD breaking $100 and stay above it, this could signal a good recovery potential for the semiconductor even though SMCI had lowered its performance expectations due to concerns over the impact of tariffs.

I think AMD CEO plan to expand its product portfolio to withstand the impact from tariffs, might be a double edged sword which could boost demand for AMD product and also demonstrate how they can get back the leadership compute and AI capabilities for data centers, edge, PCs and embedded end devices.

I think there might be an increased investors sentiment coming up for AMD, I am a long term holder of AMD stock, and will be looking forward to this.

$Ford(F)$ shares initially rose despite a challenging report on U.S. trade policy and a decline in Ford Pro sales, traditionally a strong segment for the company. Ford reported a 5% drop in Q1 revenue and a 35% decrease in profitability, with Ford Pro revenue down 16%. The results, however, beat expectations, but the company withdrew its full-year guidance due to uncertainties surrounding U.S. import tariffs.

$SUPER MICRO COMPUTER INC(SMCI)$ posted a Q3 Non-GAAP EPS of $0.31, beating estimates by $0.01, but its revenue of $4.6 billion missed by $450 million. The company revised its fiscal 2025 revenue guidance to a range of $21.8 billion to $22.6 billion, down from the previous range of $23.5 billion to $25.0 billion. Despite the revenue miss, the company remains optimistic about future growth opportunities.

$Lucid Group Inc(LCID)$ reported a Q1 Non-GAAP EPS of -$0.20, which beat expectations by $0.03. However, its revenue of $235.05 million missed by $11.11 million. Despite the revenue miss, the company remains focused on potential growth opportunities and strategic partnerships.

$Rivian Automotive, Inc.(RIVN)$ posted a Q1 GAAP EPS of -$0.48, beating expectations by $0.44, with revenue of $1.24 billion surpassing estimates by $220 million. Despite the positive earnings surprise, shares dipped slightly by 1.04% as the company continues to face challenges in scaling production and expanding its market presence.

Summary

I think the reignite of tariffs especially pharma in approximately two weeks would start to impact mostly healthcare and even drug companies, as the runway for these companies are long, tariffs might hit their cash flow to last longer, so the impact might be greater than other sectors.

As for the tech and semiconductor, I think it might be time to see how to make use of the current macroeconomics concerns to their advantage by focusing how to capture new market and also to ride dynamically with it.

So I think we could be seeing continued mixed market behavior with declines coming and selling pressure increased with more earnings coming next week from some of the other tech names in AI and security, not forgetting crypto, I think Fed announcement on Wednesday (07 May) which is expected for a rate remain consistent, might see stagnant demand once again for Bitcoin.

Appreciate if you could share your thoughts in the comment section whether you think market could continue its decline with more selling pressure after Fed decision to hold rates steady.

@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.