·
Market Overview – Powell’s Speech Flips Sentiment
On Tuesday, U.S. equities opened flat and traded calmly until midday. After Fed Chair Jerome Powell spoke, risk appetite evaporated and the S&P 500, Nasdaq, and Dow all closed lower.
- Key Takeaways: Powell highlighted persistent inflation uncertainty and rising employment risks, warning that “stock valuations are too high.”
- While he offered no new rate-cut signals, the cautionary tone spurred a defensive rotation and broad-based selling.
Macro Signals – Fed Division, VIX Spike, and Government Shutdown Risk
- FOMC Split: Some officials (e.g., new governor Stephen Milan) argued for stronger easing, while hawks like Bostic stressed elevated inflation and less need for cuts.
- Volatility Divergence: The VIX rose alongside equities earlier this week—historically a warning for near-term corrections. Institutions were already hedging with put options.
- Government Shutdown Fears: A planned Trump–Democratic leadership meeting was canceled, raising odds of a federal shutdown and adding to risk aversion.
Stock Highlights – AI Divergence and Sector Rotation
Chips & Tech:
- Micron beat Q4 estimates (EPS $3.03 vs $2.77, revenue $11.32B vs $11.11B) on AI-chip demand; watch for profit-taking after its 45% rally since August.
- TSMC jumped 3.7% on reports it will raise 3nm prices ~20% and 2nm ~50%, reinforcing its technology moat.
- Intel rebounded after three days of selling, while Nvidia and Oracle slipped on profit-taking and concerns over capital-markets “looping.”
AI & High-Beta Names:
- Opendoor slid on large insider sales and hedge-fund competition.
- Better (BETR) attracted hot money with its “AI-driven mortgage Shopify” pitch despite no profits.
Resources & Cyclicals:
- Lithium Americas (LAC) spiked after reports the Trump administration may buy up to 10% of the company and renegotiate a $2.26B DOE loan.
Retail & Big Tech:
- Amazon fell on UK Fresh store closures, FTC Prime-subscription scrutiny, and slowing cloud growth relative to Microsoft and Google.
Speculative Small Caps:
- Firefly Aerospace (FLY) hit record lows post-earnings (loss widened to –$63.8M).
- Plug Power (PLUG), up 80% this month, dropped 4.5% amid a cooling AI-power trade.
Fintech & Biotech:
- Upstart (UPST) stayed range-bound on credit concerns, while SoFi gained favor for its diversified banking model.
- Cassava Sciences (SAVA) rose as its CEO bought 238k shares at $2.25 after a prior Alzheimer’s Phase 3 failure.
Technical & Sentiment Check
- The S&P 500 pulled back to its 5-day MA after a three-day rally. Holding this level could allow a rebound toward 6,700; a break may target 6,520–6,550, near key JPMorgan option strikes.
- AI momentum and expectations for two more Fed cuts this year underpin medium-term bullishness; current dip is likely a shallow, fast correction.
Key Watch Ahead: Follow-up Fed commentary, Micron’s intraday reaction, and U.S. government shutdown negotiations.
