Intel, Defense Are Bright Spots as Market Descends Into Ugliness
Oil, yields, and earnings from Tesla and Google create a stench on Wall Street as war and tariffs pave way ahead with looming perils.
Oil, yields, and earnings from Tesla and Google create a stench on Wall Street as war and tariffs pave way ahead with looming perils.
That was a rough day for most U.S. financial markets. The major equity indices took a hit on Thursday as tensions in the Persian Gulf and Red Sea pushed WTI crude oil futures above $93 per barrel. Additionally, disappointing performance by Tesla ($TSLA) and Alphabet ($GOOGL) for their second quarters put pressure on the tech/growth type names. Alphabet ran into a free cash flow problem. Tesla just had a sloppy three months, badly missing on profitability.
The S&P 500 gave up 1.21%, while the Nasdaq Composite was slapped around for a loss of 2.15%. The yield paid by the U.S. 10-Year Note ran up to 4.7% while the U.S. Two-Year Note paid 4.36% by day’s end.
Markets seemed to take it badly when President Trump warned that U.S. forces would destroy an Iranian bridge or power plant for every vessel attacked in the Strait of Hormuz. Iran threatened to target infrastructure and energy in the region where the U.S. has overt interests.
Industrials were leaders on Thursday, led by Defense as Lockheed Martin ($LMT) popped for a gain of 10.5% in response to earnings. RTX ($RTX), which is the old Raytheon, also ran 7.3%. Discretionaries were pummeled as Tesla put the whammy on the autos.
One more day this week, gang. Dougie is back tomorrow. It’s always a pleasure to go through the trading day with you when I get the chance. Have a nice evening and may God bless you all.
Sarge out.
Position: Long LMT, RTX equity
The defense giant is forcing managers to increase long-side exposure.
Inflation pressures build, AMD’s chip event, United Rentals crushes it, and other headlines are moving stocks this morning.
Iran fighting rages on; Advanced Micro Devices showcases at AI event; GM, Alphabet, IBM, Tesla, Lockheed Martin and American Express among names reporting.
It’s looking tough out there on several fronts, including on Iran, the storage/memory stocks like SanDisk and Seagate, and tech names like Intel.
As U.S.-Iran truce hits bump after ship hit in Hormuz, I’m eyeing adding to these defense stocks; also the latest on NATO, SpaceX and Monday’s market.
Micron blows away expectations, boosting storage trade; banks pass stress test, Lockheed locks up defense deal and, wow, Wendy’s!
Let’s look at key indicators to see when momentum begins to decline.