Each the S&P 500 and the NASDAQ are sitting at new highs as we wind down a really optimistic incomes season. To date, nearly 80% of S&P 500 corporations have reported a optimistic earnings shock, with the year-over-year earnings development fee on the highest degree since Q2 of 2022.
Amid this company development, we’re now seeing rates of interest pull again following Wednesday’s core CPI knowledge, which got here in decrease than anticipated. In response, the yield on the important thing 10-year treasury bond fell to as little as 4.3% earlier than ticking greater into at the moment’s shut.
That is nice information for development shares reminiscent of Know-how, which have been struggling because the markets march to new highs. A rising fee atmosphere is a damaging for development shares reminiscent of Know-how.
Day by day Chart of Know-how Sector (XLK)
Whereas Apple’s (AAPL) 12% advance following the discharge of their earnings 3 weeks in the past is definitely a think about Know-how’s new uptrend, a reversal in each Semiconductor and Software program shares this previous week is poised to be the most recent driver.
As subscribers to my MEM Edge Report are conscious, I have been looking out for renewed curiosity in these excessive development areas, as our watchlist had high Semi and Software program names which have now been added to the instructed holdings record.
Day by day Chart of Semiconductor Group (SOXX)
Day by day Chart of Software program ETF (IGV)
Subsequent week might show to be pivotal for these teams amid earnings reviews from key gamers. Most impactful will probably be Nvidia (NVDA), which is because of report earnings subsequent Wednesday after the markets shut. Going into the report, analysts are anticipating vital income development, pushed primarily by their knowledge heart section resulting from AI demand.
Amongst Software program shares, Palo Alto (PANW) is because of launch their quarterly outcomes after the market closes on Monday. The Software program Safety inventory is recovering from a niche down in value after their final quarterly report, the place administration introduced a product launch shift. PANW has entered a brand new uptrend because it strikes nearer to closing its hole decrease.
Different non-growth sectors have additionally been shifting into favor amid elevated AI development prospects and a decrease rate of interest chance. If you would like to be tuned into these newer areas, in addition to the shares greatest positioned to take benefit, use this hyperlink right here to trial my twice-weekly MEM Edge Report for a nominal charge.
Warmly,
Mary Ellen McGonagle
MEM Funding Analysis
Mary Ellen McGonagle is an expert investing marketing consultant and the president of MEM Funding Analysis. After eight years of engaged on Wall Road, Ms. McGonagle left to turn out to be a talented inventory analyst, working with William O’Neill in figuring out wholesome shares with potential to take off. She has labored with purchasers that span the globe, together with large names like Constancy Asset Administration, Morgan Stanley, Merrill Lynch and Oppenheimer.
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