Macro Events & News
The positive momentum from the prior week faded quickly on Monday, as traders likely took profits after the strong rally fueled by robust earnings and encouraging economic data. The recent strength suggested that any negative impacts from the trade war had yet to materialize in corporate results or economic indicators, potentially delaying the broader fallout. However, the absence of concrete trade deals despite repeated assurances of progress seemed to weigh on sentiment. This changed briefly on Thursday when the U.S. and U.K. announced a preliminary trade deal, marking a potential step toward tariff relief. However, the lack of specific details, including timelines for reduced tariffs, led to a muted market response, with gains evaporating into the Friday close. News of potential weekend talks with China also failed to inspire confidence, reflecting broader skepticism about the Trump administration’s erratic and often conflicting trade messages.
Earnings season rolled on this week, but with few mega caps reporting, reducing their influence on overall market direction. However, continued strong commentary around AI spending, coupled with solid showings from Advanced Micro Devices (NASDAQ:AMD) and ARM Holdings (NASDAQ:ARM), reinforced the bullish narrative for AI, providing a potential tailwind for the broader tech sector.
On the economic front, the Federal Reserve left interest rates unchanged following the FOMC meeting, as widely expected. Fed Chair Jerome Powell reiterated the central bank’s data-dependent approach, maintaining a cautious tone amid the trade war uncertainty and noted the challenges it brings for the Fed to maintain its dual mandate. This sets up a critical week ahead, with the release of April’s Consumer Price Index (CPI) and Producer Price Index (PPI). Any signs of accelerating inflation from the tariff impact or rising unemployment could sharply increase market volatility and complicate the Fed’s path forward.
The 10-year Treasury yield was a bit more active than prior weeks and climbed to 4.37% after weak demand at auctions. The VIX retreated slightly to 21.90.
All the major indexes ended marginally lower for the week: the Dow down <1%, the S&P 500 down <1%, and the Nasdaq also down <1%.
Watchlist News
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Advanced Micro Devices (NASDAQ:AMD) AMD managed to close higher on the week despite an initial post-earnings selloff. The turnaround was driven by rumors that the Trump administration might reverse the Biden-era global chip restrictions, alongside the first trade deal announcement with the UK.
august bear notes
While the Q1 earnings report revealed cracks in AMD’s business, including slowing growth in key segments, the stock found support on speculative policy news. Despite meeting expectations, management’s evasive tone on the earnings call was noticeable, suggesting deeper structural challenges. With competitive pressure from NVIDIA mounting and execution concerns emerging along with a lack of transparency, the investment thesis may need to be reassessed. This isn’t a straightforward buy, and caution is warranted despite the recent bounce.
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Meta Platform (NASDAQ:META) saw choppy trading this week, bouncing above the $600 level on trade deal optimism midweek before fading into the weekend as broader market sentiment weakened. The anti-trust updates on other big tech firms may have also weighed on the stock.
august bear notes
The quick reversal after what appeared to be a promising breakout underscores the ongoing challenges facing big tech in a volatile macro environment. While the UK trade deal provided a brief tailwind, it lacked meaningful support for U.S. technology firms, highlighting the ongoing regulatory pressures in Europe. Despite this, Meta’s core business remains unrivaled in the digital advertising space, and the long-term thesis remains intact. Consolidation around these levels is acceptable, and the technical picture is still constructive.
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NVIDIA (NASDAQ:NVDA) had been consolidating before breaking higher midweek on rumors of a potential rollback of Biden-era chip restrictions, briefly pushing it close to $120. However, momentum faded as the week closed without confirmation of the policy shift and the UK trade deal lacked significant semiconductor provisions.
august bear notes
Despite the pullback, NVIDIA remains a critical player in the AI space, with demand for its chips accelerating as more companies double down on AI infrastructure. The potential rollback of chip restrictions would be a significant tailwind, reopening access to the Chinese market and potentially unlocking billions in revenue that has been sidelined. Meanwhile, the UK trade deal, while underwhelming, sets a precedent for future deals that could ultimately deescalate the tariff situation and reduce supply chain risk. Combined, these factors make NVIDIA one of the most compelling long-term plays in the semiconductor space, even with ongoing volatility.
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Snap Inc (NASDAQ:SNAP) opened the week with a promising continuation of its recent rally but quickly faded along with broader market weakness. After a midweek bounce, it closed slightly lower, reflecting the broader volatility.
august bear notes
The stock remains under pressure following its earnings call, where it notably withheld Q2 guidance despite posting positive growth metrics. Investors seem to be punishing the lack of forward clarity, resulting in multiple failed attempts to break higher. However, it has consistently found support, indicating a possible bottom in the current range. That said, the longer it lingers here, the more likely it is to lose support, as capital may shift to more promising names. A more definitive macro or company-specific catalyst may be needed to reignite momentum.
