Macro Events & News
Earnings season continued, with notable volatility—AppLovin (NASDAQ:APP) surged 35% after delivering strong results and guidance. In contrast with The Trade Desk (NASDAQ:TTD), who saw a sharp 31% decline as disappointing guidance overshadowed its performance. The broader market narrative remained focused on AI-driven growth, with companies weighing the balance between opportunities and the high costs of building out AI offerings.
Inflation concerns resurfaced with both the Consumer Price Index (CPI) and Producer Price Index (PPI) running hotter than expectations. However, a closer examination of the data revealed that elements feeding into the Personal Consumption Expenditures (PCE) index—the Federal Reserve’s preferred inflation gauge—showed less dramatic increases, tempering some fears. Despite the hotter headline inflation numbers, the market appeared unfazed, instead shifting its attention to weak retail sales data, delays to reciprocal tariffs, and ongoing mass layoffs—all of which contributed to the decline in yields.
The 10-Year Treasury yield had a roller coaster of a week, climbing above 4.6% midweek but ended lower for the week at 4.48%. The VIX retreated to 14.77, indifferent to continued tariff threats.
All major indexes ended higher for the week: the Dow up <1%, the S&P 500 up 1%, and the Nasdaq up 2%.
Watchlist News
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Adobe (NASDAQ:ADBE) is steadily recovering from the sharp December selloff following its earnings report. While the release of a new version of its Firefly app this week provided a boost, the stock had been trending upward even prior to the announcement. Beyond this, there hasn’t been significant news driving the recent movement.
august bear notes
As noted, Adobe is the dominant name in a continually growing industry, with a significant opportunity to capture market share in the emerging Generative AI space. However, its management team remains a critical challenge. Ironically, the leadership seems to lack creativity, often prioritizing revenue maximization at the expense of customer satisfaction. They still have substantial ground to cover to touch the high of $638 from last year, meaning there is room for upward movement ahead of the next earnings report.
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Amazon Inc (NASDAQ:AMZN) started the week on a strong note, rebounding from a mild post-earnings selloff the previous week. Several equity research firms, including Loop Capital and Daiwa Securities, raised their price targets for the stock, providing a temporary boost. However, the momentum faded as the week progressed, and weak retail sales data on Friday ultimately left the stock closing the week flat.
august bear notes
The market’s reaction to Amazon’s solid earnings report seems overly negative, especially considering the company’s continued growth across multiple segments. While the slight miss on AWS may have spooked some investors, those with a long-term perspective should remain confident, particularly given the series of equity research firms raising their price targets. However, market sentiment often requires time to digest disappointment, so it may take a few more weeks for the stock to stabilize. That said, there is strong price support at current levels, providing a solid foundation for future upside.
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Microsoft (NASDAQ:MSFT) saw a volatile week, ultimately ending near where it began. While the stock initially rallied, it faced consistent selling pressure throughout the week, mirroring the performance of other major cloud providers following recent reports of slowing growth in their cloud segments. Adding to the negative sentiment, news of a new antitrust lawsuit in France further weighed on the stock.
august bear notes
While Microsoft demonstrates fundamental strength and ongoing growth, negative market sentiment is likely to exert downward pressure on its stock price in the near term. The antitrust lawsuit in France not significantly impacting the stock, could be interpreted as a sign of underlying resilience and confidence that the new administration will be protecting American corporations abroad. However, there are concerns here as key price support levels appear to be weakening—it needs to show a definitive move up next week.
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Taiwan Semiconductor (NYSE:TSM) experienced an eventful week. The stock began strongly, reaching $209 on Monday, but subsequently declined due to persistent worries about tariffs and the company’s announcement that the recent earthquake in Taiwan is expected to impact Q1 revenue, likely placing it at the lower end of projections. However, the stock rebounded on Friday following reports that TSMC is considering operating Intel factories, a move reportedly requested by the Trump administration.
august bear notes
The potential development of TSMC operating Intel factories in the US is a surprising positive turn of events, and its implications remain to be seen. Significant financial or political incentives would likely be required for TSMC to share its proprietary manufacturing process with a direct competitor like Intel. Regardless of how this development and tariffs unfolds, the stock appears well-supported at current levels. Additionally, a recurring theme this earnings season has been increased spending on silicon, and TSMC remains uniquely positioned as the only player capable of meeting this growing demand.
