Things you need to know
- Tech lifts its head – again….and its all good!
- SK Hynix raised $25.6 billion – the ADR prices at $149
- PEP disappoints while DAL crushes it – Is the consumer exhausted or not?
- Kevy names 5 new committees to examine the FED structure.
- Try the Sicilian Swordfish
Stocks came roaring back on Thursday after Wednesday’s ‘mess’ as investors decided, at least for now, that the latest round of U.S.-Iran strikes is not the beginning of a broader regional war and that the FED mins didn’t honestly reflect anything that we didn’t know.
At the closing bell – The Dow gained 139 points, the S&P added 61 pts, the Nasdaq jumped 336 pts or 1.3%, Russell rose by 36 pts, the Transports gained 450 pts or 2%, the Equal Weight S&P added 53 pts while the Mag 7 gained 450 pts or 1.3% as buyers stepped back into the risk trade.
So here is what we saw… Tech stole the show, rising 2.1%. Software joined the party. Semiconductors bounced hard. Memory stocks came back to life. Cybersecurity caught a bid. And even the beaten-up quantum names got some love. In other words, investors weren’t buying just one stock; they were buying names that have taken a hit and now look more reasonable.
Then came the latest Micron news…. causing this stock to advance by 4.5% after they announced plans to increase its U.S. manufacturing investment to an eye-popping $250 billion to meet what it believes will be years (not months) of AI-driven demand.
And if you think it can’t get any better – …think again.
Today brings what could become another one of the biggest market events of the year as SK Hynix begins trading on the Nasdaq. The South Korean memory-chip leader raised $26.5 billion, making it the largest ADR offering ever and one of the largest equity offerings in history. And what’s more impressive is that the deal is 7x’s oversubscribed. Expect a BIG party at the Nasdaq today!
To be clear – in S Korea it trades at 2.186 million Won – ($1,446) – The ADR priced at $149 and is equal to 1/10th of a S Korean share.
That tells you all you need to know about institutional appetite for AI! Why does it matter? Because SK Hynix isn’t just another semiconductor company. It is the global leader in High-Bandwidth Memory (HBM)—the advanced memory chips that sit alongside Nvidia’s GPUs and power today’s most sophisticated AI models. No HBM…no AI. It’s really that simple.
Put those pieces together and it’s hard to argue that the AI infrastructure buildout is slowing. That said – the question remains – Will all of that spending produce the earnings growth investors have already priced into these stocks? Well, we’re about to find out…. Earnings season is now only 1 week away…..(officially)…
Yesterday, PepsiCo reported earnings—and guess what? They missed. Management blamed higher gasoline prices and a more cautious consumer, arguing that elevated fuel costs have squeezed household budgets more than expected.
I have a slightly different take. I don’t think consumers can’t spend it. I think they’re becoming much more selective about where they spend. Consumers always have a choice, and at today’s prices, they may simply be deciding that some of Pepsi’s products aren’t worth the premium. That’s an important distinction because it speaks less to the strength of the consumer and more to the limits of pricing power.
Today, the spotlight shifts to Delta. Let’s see what they have to say about the consumer. If Delta reports healthy demand for travel while Pepsi struggles to sell snacks and beverages, it will reinforce the idea that consumers aren’t pulling back across the board—they’re simply reallocating their spending toward the experiences and products they value most. AND THEY CRUSHED IT!
DAL crushes it – beats, beats beats across everywhere…. margins up, Domestic revenue up, Int’l revenue up, seat revenue up and the guidance is strong…DAL is trading up 2.3% – So maybe the issue isn’t the consumer at all. Maybe it’s where the consumer is choosing to spend. That reinforces exactly what I’ve been saying—this is becoming a story about allocation, not exhaustion – confirming my narrative. UAL & JBLU are higher in the pre-mkt too.
Look, the bar has been raised. Analysts have lifted earnings estimates, and management teams already have a very good idea of how their quarter turned out. If a company knows it’s going to disappoint, the smart move is usually to pre-announce weaker guidance ahead of earnings. Why? Because resetting expectations beforehand often softens the market’s reaction. Waiting until earnings day to deliver bad news is rarely a winning strategy.
This earnings season is about justifying the premium valuations investors have already assigned to these companies. The street has priced in exceptional earnings growth, and now management teams have to prove those expectations were warranted.
What’s really interesting this quarter is that we haven’t seen the usual wave of warnings. In fact, more S&P companies have issued positive guidance than negative guidance—a sharp departure from the historical pattern, where negative pre-announcements typically outnumber positive ones. That tells me management teams are either genuinely confident or confident enough not to reset expectations ahead of reporting.
Here’s what I think happens this earnings season: investors become much more selective. I don’t think the AI story is over. In fact, I think we’re still in the early innings of the infrastructure buildout. But that’s different from saying every AI stock keeps going straight up. So even companies that beat estimates and raise guidance—think Samsung down 17% since they reported and Micron down 8%—could still see profit-taking as investors ask the obvious question: Is this as good as it gets? As the debate shifts from “Will they beat?” to “Can they possibly beat by enough?”
That is why I expect the rotation we’ve been discussing to continue. Since June 1st, Technology is down roughly 7%, Communication Services has fallen 4.3%, and Consumer Discretionary is off 2.5%. Meanwhile, Financials have gained 8%, Healthcare is up 12%, Industrials have advanced 5%, and Utilities are higher by nearly 6%. To me, that’s not liquidation—its investors repositioning toward companies with more reasonable valuations, stronger cash flows, and less demanding expectations. Again, which does not mean you blow up your portfolio, it just means you make sure your allocations are correct for you.
Next – the FED! Kevy officially announced the members of the five independent task forces he created following his first FOMC meeting. Their mission? To take a top-to-bottom look at how the Federal Reserve operates—from how it communicates with the markets, to how it manages its balance sheet, measures inflation, uses economic data, and even how artificial intelligence is changing productivity and the economy.
Don’t underestimate what Warsh is trying to accomplish. This isn’t just about setting interest rates. He’s trying to change the way the Fed thinks, the way it communicates, and ultimately the way it makes policy. To me, this is beginning to look like a new Federal Reserve. Whether you agree with every recommendation or not is beside the point. The institution is being challenged to rethink decades-old assumptions—and that’s something investors ought to be paying attention to.
Bonds caught a bid – the TLT and TLH both up by 0.2% causing yields to retreat just a bit…the 2 yr is yielding 4.17% down 2 bps, the 10 yr is at 4.54% down 4 bps, while the 30 yr is at 5.05% down 3 bps – but they are still elevated and thus will help keep a short-term lid on stocks….
Oil is lower again this morning, trading around $71.55, down from nearly $76 on Monday, as the market struggles to reconcile two competing narratives. On one hand, renewed military strikes involving Iran have forced traders to price in the risk of supply disruptions through the Strait of Hormuz. On the other hand, increased production from the UAE continues to add supply to the market, helping to offset much of that geopolitical risk premium.
Until we get some clarity – I think oil trades in the $70/$80 price range. Because the market hasn’t decided whether geopolitics or supply deserves the spotlight.
Gold continues to churn – this morning it is down $17 at $4,105…..and remains in the $4,000/$4,350 range.
There is no eco data today.
European markets are mostly higher…. Germany is flat, and the Euro Stoxx is down 0.1%. Italy and Spain in the lead up 0.6% & 0.4%
US futures are leaning lower…. While Dow futures are up 90 pts, the S&P are down 4 pts, the Nasdaq is down 103 pts, while the Russell is down 4 pts.
The S&P closed at 7543 up 61 pts, short term resistance at 7,560 if we bust up and thru then look to the all-time high at 7,620 as the next target. My gut says that the SKHynix listing will create all kinds of excitement in the memory space – but not the whole tech sector. Support remains at 7,424.
Give me a call at 561-931-0190 to discuss your goals and your timeline. Let’s assess the risk in your portfolio and your tolerance for volatility – happy to do a complimentary portfolio review and risk assessment.
Take good care,
Kp
[email protected]
Source: Bloomberg, CNBC, Reuters, Wall Street Journal
This media segment contains general market commentary based on publicly available information and is provided for informational and educational purposes only. It is not intended as, and should not be construed as, investment advice or a recommendation to buy or sell any security.
Any references to specific securities, asset classes, market levels, technical indicators, or sectors are provided solely for illustrative purposes to support market commentary. Such references do not represent recommendations and should not be interpreted as reflecting the performance of any SlateStone Wealth, LLC investment strategy, portfolio, or client account. Past performance of any referenced security or index is not indicative of future results.
Forward-looking statements, including projections of market levels, technical support or resistance ranges, economic outcomes, or potential market reactions, are based on current opinions and assumptions and are subject to change without notice. Actual results may differ materially. Investing involves risk, including possible loss of principal.
Discussion of market opportunities, valuation compression, or sector rotation does not imply that any particular investment is suitable for any specific investor. Investment decisions should be made based on an individual’s objectives, financial situation, risk tolerance, and time horizon.
The firm and its clients may hold positions in securities discussed, and such holdings may change at any time without notice.
Advisory services are offered through SlateStone Wealth, LLC, a registered investment adviser. Registration with the U.S. Securities and Exchange Commission does not imply a certain level of skill or training. An advisory relationship is established only pursuant to a written agreement. For additional information regarding our services, fees, and conflicts of interest, please review our Form ADV Part 2A, available at www.adviserinfo.sec.gov or upon request.
If you contact our firm to request a consultation, any discussion would be preliminary in nature and would not constitute personalized investment advice unless and until an advisory agreement is executed.
Grilled Sicilian Swordfish
You need: swordfish steaks (6–8 oz each), olive oil, Juice of 2 lemons, garlic, finely minced, chopped fresh parsley, dried oregano, lemon zest, s&p.
For the tomatoes topping you need: cherry tomatoes, olive oil, Fresh basil
In a bowl whisk together: Olive oil, lemon juice, garlic, parsley, oregano, lemon zest, s&p. Set aside so the flavors come together.
Grill the Fish** – Heat the grill to medium-high. Brush the swordfish lightly with olive oil. Season generously with s&p.
Grill about 4 minutes per side, depending on thickness. Don’t overcook it.
While the fish cooks, toss the tomatoes with olive oil and salt. Place them in a grill basket for 4–5 minutes until they just begin to burst. Then add the torn basil.
Place the swordfish on a platter Spoon the sauce over the top.
Scatter the grilled tomatoes around the fish. Serve with roasted baby potatoes.
A cold glass of Pinot Grigio is the perfect match.
***The biggest mistake people make with swordfish is overcooking it. Pull it off the grill when it’s just barely opaque in the center. Let it rest for five minutes, then spoon the sauce over the top. The hot fish will soak up all those bright Sicilian flavors, and you’ll think you’re sitting on a terrace overlooking the Mediterranean instead of your backyard.
Buon Appetito