Stock Market Weekly Update - 7/9/23

What’s happening in the Stock Market - Weekly Update

On Wednesday, 7/5, the FOMC statement was released which said “Given the continued strength in labor market conditions and consumer spending, however, FED sees the possibility of the economy continuing to grow slowly and avoiding a downturn as almost as likely as the mild-recession. I don’t think we may see any recession, at least not in the near future.

On Thursday, 7/6, ADP reported 497,000 private jobs were added for the month of June, well ahead of estimated 228,000 by Wall Street. It can be noted that in May also we saw big job growth of 267,000 bs. 220K. For the Wall Street, the bad thing could be that huge job growth but the good news is “wage growth is slowing”.

On Friday, the labor department released the unemployment Job report where payrolls increased 209,000 in June, below the consensus estimate for 240,000. The unemployment rate was 3.6%, down 0.1%. Wages increased 4.4% from a year ago, slightly higher than economists estimated.

Disney (DIS): I added this stock a year ago. The stock went up initially but it has been few quarters the company has been struggling. I don’t see anything getting better soon. Hence, I don’t see any compelling reason to keep this stock. So, I have decided to SELL it on Monday and remove from my blog. If things changes then I will review it in future.

Some green energy stocks have started picking up little momentum because money from IRA (Inflation Reduction Act) should start flowing soon. I will keep a close eye on STEM, PLUG and LAZR. Carvana (CVNA) which I have been emphasizing since early this year has gone up from $5 to $30. As I have said many times, this is a highly shorted stock. The company has forecasted to have EBITDA positive starting this quarter, hence we are seeing some short squeeze. We will see once Q2 earning is released on 8/3. If earnings does not go well, short sellers would be excited, however, if it comes with good earnings then there may be huge short covering igniting further rally. This is not really an investment but a trading stock at this time. 

This week we will also see CPI (Consumer Price Index - inflation) data on Wednesday, 7/12, which will be really critical whether Fed will hike interest rate or not! Based on the robust employment we may probably see one more rate hike. The PPI (Producers Price Index) will be released on Thursday.

The stock market had some nice run in last few months. There were a little pullbacks in last couple of weeks. I see it as healthy for the stock market. However, Q2 earrings kicks-off from Friday with major banks reporting - JPM, WFC, Citi, BlackRock and UNH. The earnings will gain momentum starting the week of 17 July when Tesla (TSLA) and Netflix (NFLX) would be the first big tech companies to report earnings on 7/19. So, we will see how it plays. In my view, the market will be waiting to see the CPI data this week followed by Bank's earnings. We may see some uptick in selected technology stocks as they approach to Q2 earnings date. Subsequently, we may start seeing the stocks goes up/down depending on their results. Stocks will be rewarded if they beat expectations and provide uptick forecasts otherwise they may get hammered. As the stock market has gone up, particularly NASDAQ up 30.5%, so it makes senses to take some chips out of the table. The main determinants going forward will be earnings and FED. This is little early to think but September has not been an investors friendly month so one have to be little watchful.

If you have not read my JULY Investment blog, please make sure to read it. Because I write it after doing lots of research, hence I am sure it would be helpful!!. But ultimately that's your choice...