Nasdaq Today: Semis Rally, Micron Earnings, Suing FB and GOOGL?

It was all about the Nasdaq today. Of the major indices, it did the best on Wednesday, rallying 0.32% while the S&P 500 and Dow Jones fell 0.02% and 0.04%, respectively.

nasdaq today
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It was a really interesting day of trading. The market got off to a hot start, especially tech stocks. The broader catalyst came from Steve Mnuchin, the United States Secretary of the Treasury. He said that a trade deal with China is 90% complete.

This gave investors plenty of optimism, especially with the G20 summit starting on Thursday and with President Trump reportedly meeting with President Xi on Saturday. I still don’t expect to see a “deal is done” tweet over the weekend, but we don’t necessarily need one either. As long as China and the U.S. are progressing toward an agreement and other tariff escalations are on hold, that’s all investors really need.

So does Wednesday’s retreating price action mean investors aren’t buying it? That’s a strong possibility. But again, it’s not the worst thing to go into an event like this with a cautious tone, rather than blinding optimism.

What else sparked a rally in the Nasdaq today? Oh yeah, earnings!

chart of the nasdaq today
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Source: Chart courtesy of

Winners in the Nasdaq Today

Micron (NASDAQ:MU) stock surged more than 13% on the day after the company beat on earnings and revenue expectations. Earnings of $1.05 per share came in 26 cents ahead of expectations. Revenue of $4.79 billion slipped almost 40% year-over-year but beat estimates by $90 million. The company also found some creative legal ways around the Huawei ban. Here’s how to trade Micron now, by the way.

Not everyone is ready to board the bullish train though, with a number of skeptics still out there. But it did give a solid lift to Applied Materials (NASDAQ:AMAT), Lam Research (NASDAQ:LRCX) and Western Digital (NASDAQ:WDC).

An improving trade-war rhetoric and Micron’s better-than-expected results helped give a lift to semiconductor stocks, which was one of the biggest winners on the day. Should the trade war lift, it will remove a lot of uncertainty for a number of these players. Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD) and Broadcom (NASDAQ:AVGO) pulled back from Wednesday’s highs, but all logged strong gains. Qualcomm (NASDAQ:QCOM) and Intel (NASDAQ:INTC) also did well, up 3.3% and 2.9% on the day, respectively. (NASDAQ:JD) logged a 6% gain on two-times average volume, vastly outpacing Alibaba (NYSE:BABA) on the day. That’s on improving trade war discussions, as well as its best “6.18” Anniversary sales results.

Losers of the Day

While AbbVie (NYSE:ABBV) is rallying from its 15% tumble on Tuesday after agreeing to acquire Allergan (NYSE:AGN) in a $68 billion deal, the rest of the group is struggling Wednesday. Bristol-Myers Squibb (NYSE:BMY), which is in agreement to acquire Celgene (NASDAQ:CELG), stumbled 2%. CELG shed another 84 basis points too.

There were more, though. Gilead (NASDAQ:GILD), Align Technologies (NASDAQ:ALGN), Regeneron (NASDAQ:REGN), Incyte (NASDAQ:INCY) and other all fell. The Democratic debates tonight and tomorrow likely won’t do the group any favors, either.

Surprisingly, Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) only fell 0.68% and 0.67%, respectively. That’s despite president Trump saying that “we should be suing” these companies. First antitrust concerns and investigations, now the president saying things like this? Yikes.

Finally, Paychex (NASDAQ:PAYX) stumbled 3.6% on almost four-times average volume. Fourth-quarter earnings of 63 cents per share missed estimates by a penny, while revenue of $980.4 million squeaked past analysts’ expectations by just over $1 million. Management’s full-year revenue outlook was slightly ahead of estimates, but its earnings outlook was a little short. That’s likely causing some of today’s pullback.

Bottom Line on the Nasdaq Today

We made a positive step forward on Wednesday, but it was a cautious one. If the trade talks take a step back, so too will the markets. I think that’s pretty clear, especially based on today’s tepid action. If trade talks progress though, it’s clear that semiconductor and tech stocks are ready to run, potentially to new highs.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long AMD, AVGO, GOOGL and NVDA. 

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