Stock Market Update - 5|29|23

 Stock Market Update

On Sunday, President Joe Biden and Republican House Speaker Kevin McCarthy  signed off on an agreement to temporarily suspend the debt ceiling and cap some federal spending in order to prevent a U.S. debt default. It’s expected to be voted in House and Senate this week. We will see how it goes. But this is a positive development and it should help calm the investors nerve. 


As we know stock market has been roaring for last 3-4 weeks, particularly Nasdaq which has gone up 24% this year! We have to be thrilled if we are invested in the right stock, however things are not as rosy as it feels. The top 10 stocks of the S&P 500 have contributed almost all these gains and remaining 490 companies are almost flat. The market rally is mostly contended to two group of stocks:

  1. Those companies who are or expected to be working on Artificial Intelligence (A.I). Undoubtedly, A.I could transform increasing productivity but it has gone too much too fast, particularly after NVDA earnings. The semiconductor/chip sectors like NVDA, MRVL, Broadcom (AVGO), Microsoft etc. are on fire. Investors are chasing A.I related stock. Another one stock to watch is C3.AI (AI). Other stocks like Google, Amazon have participated off late.
  1. In addition to A.I euphoria the other category is the large cap stocks who came with good earnings. From the beginning of the year, during my January blog I wrote that this year will be a stock pickers market. Those companies comes with solid results (Revenue + Profits) will thrive and those miss will get clobbered. 

When time is good take the opportunity because market sentiment changes fast. But good companies coming with good earnings should continue to do well. As I wrote in my blog, market is restricted to limited stocks. So how long and how far can they go? It’s very difficult to predict sometime the stock keeps going up on momentum rather than fundamentals. However, to see a major market turnaround for longterm, the other group of stocks need to participate. In other words, the breadth of participation is required where investors need to find other stocks which are decimated but have future potential. 


The core personal consumption expenditures (PCE) report came on Friday. The price index rose 0.4% in April and 4.7% from a year ago, both a touch higher than expected by economists. Despite the higher inflation rate, consumer spending jumped 0.8% for April, while personal income was up 0.4%. The other important economic data expected this week

  • Job Openings for April on 5/31
  • ADP Payroll for May on 6/1
  • Unemployment Data (Nonfarm Payrolls) for May on 6/2

A few key earnings this week: Salesforce (CRM), Broadcom (AVGO), Chargepoint (CHPT), C3.AI (AI), Macys, Dollar General, CrowdStrike etc.


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