Stock Market Update - 9|17|23

 

  • Last week was not a great week for the stock market. On Friday, we also saw triple witching (stock options, index options and futures) expiration for the quarter. Hence, stocks were pulled down. Semiconductor stocks were slaughtered on the rumors that Taiwan Semi (TSM) is telling the vendors to slowdown their supply. That created fear among investors that chips demand may be slowing. I don’t know how far this rumor is true!! However, this could also be a plan of big fishes to bring down the market on a triple witching day for their gain!!
  • Federal Reserve FOMC meeting is scheduled for this week, September 19-20. Per current survey, 97% believe that Fed will pause rate hike this month. In other words, no interest rate hike.
  • The consumer price index (CPI), rose a seasonally adjusted 0.6% for August, and was up 3.7% from a year ago, Economists were looking for respective increases of 0.6% and 3.6%. Is this the start of another wave higher inflation? That’s the big fear in the stock market. But the core inflation (excludes food/energy) moved down to 4.4% in August. That was the smallest increase in core prices since September 2021. Hence, I do not think we may experience another major inflation. In fact, the UAW strike  involving automobile workers in the labor union United Auto Workers and the three largest automakers in the United States—Ford Motor Company, General Motors, and Stellantis could increase the unemployment numbers. The producer price index (PPI) increased a seasonally adjusted 0.7% in August, higher than the 0.4% estimate and the biggest monthly gain since June 2022.
  • Retail sales rose 0.6% in August from the previous month, above Wall Street's estimates for 0.1% growth. Sales excluding auto and gas increased 0.2%, above estimates for a 0.1% decline that was expected by analysts.
  • Apple (AAPL) released its latest iPhone 15 and new Apple Watch. It’s the same old things with better camera, chip, color etc. It looks like Apple has forgotten innovation after Steve Jobs! Sales are declining YoY, profit has come down. Recently, the Chinese government restricted to use of iPhone by the government. With declining revenue it’s selling at forward P/E of 27 and certainly that’s not cheap. But on the positive side, the new upgrade cycle should compensate to some extent. Also, it services revenues may continue to go up.
  • Michigan’s consumer sentiment survey showed one-year inflation expectations dropped to 3.1% in September, tied for the lowest since January 2021.
  • ARM IPO: The stock ran after IPO. There were lots of excitement but I will be very careful on this as it’s more expensive than NVDA. NVDA and AVGO are two chip stocks I like at this time. 
  • My final thoughts: As said before, we may see market bounces back as quarter-end window dressing/readjustment by money managers and institutions kick-off soon (in next few days). Also, Fed is likely to pause. If Fed indicates or take a dovish stand then market may run. But I don’t think Fed will be dovish!! Whatever it's I do expect market to bounce back to end the year.


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