The NASDAQ survived the market’s fade on Wednesday and finished on positive ground, thanks to a strong performance from the chipmakers.
For the most part though, stocks are just waiting around to hear what comes out of the trade talks between President Trump and China President Xi at the G20 this weekend.
A stronger-than-expected report from memory chip maker Micron (NASDAQ:MU) was the catalyst for tech’s strong day. The stock soared more than 13% and brought a lot of the semis along for the ride.
As a result, the NASDAQ snapped its three-day losing streak with an advance of 0.32% (or about 25 points) to 7909.97.
However, the S&P’s skid stretched to four days with a decline of 0.12% to 2913.78. The Dow was off 0.04% (or about 11 points) to 26,536.82.
Stocks are coming off their worst session of this strong month, as the indices didn’t take kindly to a couple Fed officials questioning the certainty of a sharp rate cut next month.
But that obsession didn’t carry over to today. Investors were back to crossing their fingers in hopes that the upcoming summit will lead to some progress on the trade front.
The day actually started out with some positive trade news. Treasury Secretary Steven Mnuchin stated that a deal is about 90% of the way done and that there’s a path to get the rest.
So stocks started Wednesday in the green.
However, White House officials may have gone to the well too many times on this issue. It wasn’t too long ago when we thought they were hours away from a trade deal… and then things just fell apart.
Therefore, stocks are looking for more than words at the moment, which doomed the morning rally.
But there are two encouraging things as we move toward the back half of the week. First of all, the G20 meeting is almost here. We’ll soon know what happens instead of guessing about it.
Secondly, despite recent losses, stocks are still putting together an awesome month and remain within striking distance of their all-time highs. All they need is a push!
Today's Portfolio Highlights:
Home Run Investor: After Micron’s strong quarterly report last night, Brian wanted to add a chipmaker to the portfolio. The editor picked up Diodes (DIOD), a Zacks Rank #1 (Strong Buy) manufacturer of high-quality discrete and analog semiconductor products. The company has beaten the Zacks Consensus Estimate for four straight quarters with the most recent surprise being a solid 13%. Make sure to read the complete commentary for more on today’s addition of DIOD. By the way, the portfolio is now basically fully invested and Brian wants to take a breather, so there will be no moves tomorrow.
Counterstrike: “The reason the Nasdaq outperformed was all because of Micron. The company saw a 34% surprise to the upside on EPS, helping the stock up over 12%. This performance shouldn’t come if the company is getting destroyed on the trade war, and because the numbers were far above what was expected (not as bad as feared), the stock surged. And with Micron, the rest of the semiconductor space exploded.
“While Micron was a great win for the bulls, nothing really matters until the G-20, which starts tomorrow. Expect PLENTY of headlines to keep the algos busy.
“The next two days will be big for the market. The bears are ready to sell if no progress is made on the trade talks. Look for the headlines to move markets big time and be on alert for oversized down move if we get negative news. If we get some positive rhetoric, it could be enough to get the market back to highs. While there won’t be a deal announced, all we really need is talks to be rescheduled and a friendly outcome, with no negative tweets.” – Jeremy Mullin
Options Trader: "The whole world will be watching to see if the U.S. and China can strike a long-awaited trade deal, or at least agree to continue negotiations.
"Stocks rallied in the morning on optimism that a deal will eventually get done. Especially after Steve Mnuchin said that the deal, before talks broke down a couple of months ago, was 90% finished, and that he thought there was now 'a path to complete this'.
"He continued by saying, 'the message we want to hear is that they want to come back to the table.'
"The G20 meeting starts on Friday and wraps up on Saturday. Since the Trump-Xi meeting takes place afterwards on Saturday, the markets won’t get a chance to react until Monday (or Sunday if you count the futures market)." -- Kevin Matras
Until Tomorrow,
Jim Giaquinto
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