To The Moon

Stock market experience volatility in early session causing the major indices to remain stagnant as investors awaits the Federal Open Market Committee's (FOMC) policy announcement.

The market is expecting the decision to show rates remain unchanged, which was expected and Fed Chair Powell announced that the decision was to keep the federal funds rate steady at 4.25-4.50%. Fed Chair went on to emphasize that the current policy provides flexibility to assess further economic data before making any rate adjustments.

DJIA increased by 0.70%, S&P 500 followed with a climb of 0.43% while NASDAQ did an increase of modest 0.27%. We saw significant declines from Alphabet (GOOGL) and Apple (AAPL), both decline 7.5% and 1.1% respectively after a report that Apple might introduce an AI search feature, potentially affecting Google's market share.

Key economic data from Wednesday shows that there is a significant rise in the Weekly MBA Mortgage Applications Index, which increased by 11.0% compared to a previous decline of 4.2%.

Advancing Stocks Overrun Declining Stocks

Overall, advancing stocks outnumbered decliners, with a 3-to-2 advantage on the NYSE and an 11-to-10 margin on the Nasdaq. The positive sentiment was partly fueled by the People's Bank of China's policy easing and optimism surrounding upcoming trade discussions between the U.S. and China in Switzerland on 08 May.

But investors choose to remain cautious after Trump state that he would not reduce the 145% tariff on Chinese imports during negotiations.

S&P 500 Technology Sector Was Helped By Chipmaker Rally

The S&P 500 Technology sector was helped by the chipmaker rally after reports of the Trump administration considering lifting AI chip export restrictions spurred buying interest in chipmakers, pushing the $Philadelphia Semiconductor Index(SOX)$ up by 1.7%.

If we looked at how things have been developing for the chipmakers, it looks like the bulls for SOX is making an attempt to create a daily uptrend, as SOX is trading near the 50-day period now, RSI is showing promising momentum, which could help to push SOX higher if there is positive news coming from the talks to lift AI chip export restrictions.

I will be considering to take a small position in SOX by this week.

The Technology sector gained 0.91% despite Apple’s declining by 1.1%. We also saw Consumer Discretionary and Health Care sectors performing well with gains of 1.02% and 0.81% respectively. In the tech sector, $NVIDIA(NVDA)$, $Advanced Micro Devices(AMD)$ , Broadcom (AVGO), and Intel (INTC) experienced stock gains following reports that the Trump administration plans to rescind the AI Diffusion rule. This rule, implemented during the Biden administration, aimed to limit the spread of advanced AI technology outside the U.S. The potential repeal could positively impact semiconductor companies by easing trade restrictions.

A federal judge upheld the FDA's determination that the shortage of $Eli Lilly(LLY)$ weight loss drug Zepbound was over, marking a legal victory for the company. The ruling prevents compounding pharmacies from producing copycat versions of the drug, supporting Eli Lilly's market position.

The Communication Services sector loss of 1.84% was dragged down by Alphabet’s 7% decline.

The Department of Justice and the Federal Trade Commission are launching a public investigation into anticompetitive practices in the live concert and entertainment industry, following an executive order by President Donald Trump. The agencies are seeking input from various stakeholders, including consumers and artists, to ensure fair competition in the industry.

Stocks To Watch

Arm Holdings (ARM) shares plummeted 8% in after-hours trading following disappointing guidance for the upcoming fiscal first quarter. The British chip design firm projected adjusted earnings per share between $0.30 and $0.38, falling short of the $0.42 expected by analysts. Additionally, Arm's revenue forecast of $1B to $1.1B, with a midpoint of $1.05B, was below the $1.1B consensus estimate. Despite these projections, Arm reported a robust fourth quarter, with revenue climbing 33.6% year-over-year to $1.24B.

$Alphabet(GOOGL)$ shares saw a significant decline of over 8% after Apple executive Eddy Cue raised concerns about search traffic during an antitrust trial. Cue mentioned a reduction in searches within Apple's Safari browser for the first time in two decades and speculated about the potential obsolescence of the iPhone due to artificial intelligence advancements. Apple is exploring AI search options, with discussions underway with Perplexity AI and Anthropic.

AppLovin (APP) reported impressive first-quarter results, with GAAP EPS of $1.67 surpassing estimates by $0.23, and revenue of $1.48B exceeding expectations by $100M. The company's financial guidance for the second quarter anticipates continued strong performance, with total advertising revenue projected between $1.195B and $1.215B.

Rivian Automotive (RIVN) highlighted its focus on autonomous driving initiatives during its earnings call. The company introduced the Rivian Autonomy Platform on Gen 2 R1 vehicles and a hands-free autonomy feature, expecting these advancements to influence consumer purchasing decisions in the future.

AMC Entertainment (AMC) reported a first-quarter Non-GAAP EPS of -$0.58, beating expectations by $0.03, with revenue of $862.5M surpassing estimates by $25.45M. However, attendance figures showed a decline compared to the previous quarter, reflecting ongoing challenges in the cinema industry.

Summary

I think the market would continue to exhibit a mixed reaction as there are still uncertainity as US-China talks is on-going, we are seeing the earnings report coming from chip makers, and ARM outlook is not that positive, this could indicate the impact of export restriction and demand concerns.

There are other sectors which might be hit by the concerns of rate remains unchanged especially the interest rate sensitive sectors. So I think as investors, we might want to go with the flow when we invest or trade.

Appreciate if you could share your thoughts in the comment section whether you think market would continue to behave in a mixed sentiment though it might closed on a modest note.

@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.