Stocks Mixed Amid Rising Yields, Oil Prices; HPE, Snowflake, Microsoft In Focus

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0:32Good afternoon, everyone, and welcome to Stock Market Today for Wednesday, September 30th. It's Alexis Garcia here, and we had some mixed market action after a cooler-than-expected inflation report with stocks fading at the close. Tech led the upside, and of course, we have micron earnings due here any moment. We'll get to all that, but first, let me introduce my cooler-than-expected co-host today. That's IBD News Editor Ed Carson. Ed, how's it going? Yeah, with everything, it's an expectations game. I'm glad I could beat that bar. I would like to take a look at HPE, Hewlett Packard Enterprise, as well as Snowflake and Microsoft.

1:14All right, well, we'll get to those names. But first, I want to just quickly rattle off how the index is closed, Ed. Not pretty close today. The S &P 500 down a quarter of a percent. The NASDAQ up a quarter of a percent. And of course, the Dow, which has been the laggard down almost nine tenths of a percent. I'm going to go ahead and get my screen share going. But talk to me here because it's really been a tale of two markets. We're really seeing just that divergence happen even more with mega caps really leading the way. It seems like there's really just a handful of stocks here that are carrying things right now, at least taking the focus, off the pressure on the broader market.

1:59Yeah, we saw mega caps and software rise. And yeah, about a week or so ago, the market was divided. But it felt like the NASDAQ, it felt a bit like, can we use a political metaphor? It felt like the party was divided, growth, and it was finally uniting. Okay, we're all going to go up together, but the rest of the market still wasn't there. You still have to win that general election. But we're back to that back and forth and so much of the market has just never really recovered. So while the Nasdaq is near highs, you don't know what you're going to get in a particular sector. And then you look at the rest of the market, the RSP, the Dow, IWM, and pretty much anything that isn't big cap techs, looks pretty awful.

2:40These are pretty clear declines. There's not anything around that. So it just makes it difficult. It doesn't mean you can't do something, but it just makes it you have to be very nimble and you have to be ready to pull out. Obviously, treasury yields are a huge factor in this. That one has been a major reason for it, but for why the market has been selling off or coming under pressure. It's been amazing how the NASDAQ has resisted that, but that's just hard to take. And yeah, again, divided markets are just more difficult. because you just never know what you're going to get. And it's divided even within that.

3:22You know, the growth is divided on any given day. So it makes it tough to buy on strength. Yeah, it's still a challenging market. There were promising signs a little over a week ago, less promising now. It's not a bad market. You know, if you look, there's definitely things that are positive about it. So it's, you know, but it's still very challenging. Yeah, well, we love your optimism, Ed. And, you know, again, just to kind of look at this here, we're looking at RRSP right now. There's just some indicators of market breadth. This is the S &P 500 equal weighted ETF. I mean, this one has been trending lower for quite some time.

4:00It's well below the 21 and 50 day lines. We could look at SPY. That's the SPYDER S &P 500 ETF. You know, that one was down slightly today. Again, stocks fading here at the end. And we look at the Qs. You know, tech has been doing pretty well. This went up a quarter of a percent. QQE also declining a little bit today. This one more hugging its 50-day line. But when you look at some of these market breadth indicators, I mean, what is that saying to you? It's just been so hard to establish a trend here in this market. And again, yeah, and again, as I say, the sectors within growth have been tricky.

4:43But yeah, the Dow was down 0.9. and say, oh, okay, that's old stocks. Well, it is and it isn't. It has Apple. It has Google. It has Microsoft. It has NVIDIA. It has Amazon. Four of those rose at least one percent, rose up for 1 % today. And I think in NVIDIA rose 0.5. So there was a lot of things and the Dow still fell 0.9. You know, QQQE, which doesn't really weight those mega caps, it was down today. You know, it's sort of hugging the 50-day line. You know, again, it's just as difficult there and you just never know when things are going to go. Things are working. It's not terrible. But that's what makes it worse because choppy markets can lure people in and it lures me in at times and you don't want to ignore it because there are times, well, maybe this is the moment and you don't want to wait until the market gets surges for day after day after day.

5:33But so it draws you in, but it can choppy markets, chop investors up. I mean, if the market looked like RSP, we'd just all be sitting on the sidelines. It's like, okay, fine. This is a bad market. Maybe you have a long-term position or two, fine. but you're not doing anything. But when it's this kind of where it's a situation where it's going up and down, very tricky. It can often be the worst market for active investors. Yeah. Let's take a closer look at the NASDAQ, Ed, because this seems to one that is working right now, again, up about a quarter of a percent today, fading from those intraday highs.

6:07But, you know, we had that nice Skane, to start last week, it seems to want to try to at least hold around this level. But again, you're still getting chopped up here, but above the 21-day line. So what are your thoughts here? The NASDAQ still looks pretty good. There are things in chips. There are things in software. There are biotechs. There's mega caps. They're all doing well. They may shift around from day to day, but there are things that are working or setting up. you know this is basically sort of a high handle handle to this long consolidation so if the market looked like this i'd be in a pretty positive mood it's like yeah it's disappointing we we stalled at highs but this is perfectly natural but the problem is this isn't the whole market but yeah this is sort of where this is where you want to be for the most part uh is because if you're going to be playing things because this is what's working this message comes from viking committed to exploring the world in comfort.

7:03Journey through the heart of Europe on an elegant Viking longship with thoughtful service, destination-focused dining, and cultural enrichment on board and on shore. And every Viking voyage is all-inclusive with no children and no casinos. Discover more at viking.com. Yeah, let's take a look at small caps. Just a contrast here. Small cap is down about four-tenths of a percent today. They're in consolidation. It's getting to the lower end of this flat base here. But again, something that has really struggled, Ed, in the last couple of months here. So thoughts here. Yeah. I mean, this doesn't have the mega caps at all.

7:45And this is just really coming down. I think there's a lot of retailers, a lot of banks, a lot of things out there. There's just, you know, mortgage rates are at 7.5%. You got to figure what the borrowing costs are and what their customers are paying. It's just, this is tough. For companies that are not growing like crazy, more cyclical companies that are going to grow with the economy, these interest rates are really punishing both, you know, and the fuel costs are punishing, you know, the diesel costs, bringing in supplies, such, it's just, it's just not, it's not a good environment. Yeah, the 10-year treasury, that is really moving up.

8:19That actually intraday got to its highest level since 2002. What's ironic is that, okay, the inflation report, it was cooler than expected, but it actually was because of a methodology change for the most part. So I think there was some of it, it wasn't really that cool. But the two-year yield, which is more closely tied to the Fed policy, that was flat today. And the odds of a Fed rate hike in October have actually fallen below 50%. It was at just over 50 % yesterday. A week ago, it was 70%. So the treasury yields are rising. And I don't have the TIPS data, but I know that the treasury inflation protected yields, those have been rising, which suggests it's not inflation, that it's more either just the demand for money, whether it's the combination of government borrowing in the US and around the world and AI borrowing, the combination rather than inflation.

9:14So anyway, I know that's a lot in there, but it just seems like the long end is doing things that are not particularly related to inflation. And this is a real pressure for the market. It's a real pressure for the economy, which is still growing. Yeah, let's look at some more ETFs here, Ed. You mentioned software. Let's look at IGV. This one up today about 1.2%, bouncing off this 21-day line. So again, something that seems to be working here, but it hasn't been a smooth ride. No, it is not. Again, we'll just have to see how that goes. And that's the problem because you can see there's been this trend.

9:56But after that trend a few months ago, yeah, it's been choppy up and down. And a lot of stocks reflect that. And so you buy on strength and you can easily get shaken out along the way. so maybe this is setting up again look this could be a new base sort of there's a lot of bases or stocks that are up there so you definitely want to be looking in this area but yeah even in areas that are leading the market it's been tough do you think this uh buy point still holds here this 108 buy point you know i would use the new base at this point i would actually actually that 108 isn't bad because i would probably use the highs from last week as the place where i'd get in which is essentially the same thing so it's probably like 109 or something uh but so yeah i I would probably use that as sort of an early entry into a new base.

10:40It is close to the old highs, which is nice because if you get above those highs from last week, you really don't have many people who are upset. Most people are happy that they're in. Yeah, let's take a look at MAGS. That's the Magnificent 7 ETF. And again, it seems like this group of stocks are really doing a bulk of the work here lately. This up four tenths of a percent, but again, fading off highs for the day. It is technically in a buy zone. Ed, so thoughts here on the chart. Yeah, I mean, this has been doing well. And a lot of them, as I mentioned, were up. There was one or two that were down, but, you know, fine.

11:14You know, this has been doing well. And it is disappointing because you could have understood, and there are some names, and we'll look at one of them, where they're moving up. Oh, okay, let's buy it here. And then it fades off. But it's still acting pretty well here. Yeah, seems to be a lot of head fakes out there. Let's look at CHIPS, SMH. It's the VanEck Semiconductor ETF, up about four-tenths of a percent today. This one in a cut base with a 671.83 buy point. Yeah, I mean, this is sort of setting up. Maybe it's a little too low to be a handle. I haven't done the math, but it's basically a handle.

11:48It's above the August highs. A lot of CHIP and AI hardware stocks look like this. So it's right at the area where it's like, okay, here we go. or this is right at the area where we may fall back again. So we'll see micron earnings that we'll look at later on and see how that reacts. And it could be a while as we wait for guidance and stuff. But yeah, so again, setting up. So all those areas are setting up. On day-to-day, they may diverge and everything, but there is a lot of positive in growth. The game's changed. Capital markets are faster than ever. What's your next move? With data, credit ratings, indexes, and investments, Morningstar removes the doubt that can cloud investment decisions so you can move forward.

12:29Morningstar, nothing in your way. All right, well, let's take a look at some individual stocks, starting with Hewlett-Packard. That's ticker HPE. This one up 3.9 % today. Back in this buy zone here out of a cup with handle base, that's a 63.44 buy point. Yeah, I mean, so this broke out. it came out on some stronger guidance for like its networking business, pretty strong growth that they're expecting there. And they announced a big, big order from AMD and people were expecting that there'd been a lot of expectation. That's why I think if they had, that would have been a problem. This one did very well in the morning and then faded off.

13:10So it closed closer to session lows. So it's still closed in a buy range. It just was a little disappointing to finish, but in the buy range. The earnings and sales have been strong. The relative strength line, that looks like it's at a new high there pretty clearly. So yeah, a lot to like about this name. So yeah, this is a strong performance here for sure. And how about we jump over to Snowflake, ticker S-N-O-W. This one up 2.8 % today, Ed. kind of has been range bound here since this gap up on earnings. But in a profit taking zone, if you bought back here in this cup with handle base around the 279 area.

13:58So let me get your thoughts here. Yeah, the profit taking zone, I'm going to sort of ignore at this point. If you didn't do it before earnings or after earnings, it's like you're not taking profits off of that. I mean, you can do it. It found support of its 50 day line. And I sort of ignore that. I'm going going to put my big thumb over that earnings day and a couple of days in there. It came off because that's right when software had some really bad times. So I sort of feel like if Snowflake had come the next day, this might have fallen to the 50-day line and then rebounded a little bit. If you look on a weekly chart, very tight action, including that one week.

14:33So it's been very tight. There's a three weeks tight in there. It might be another three weeks that could develop now. So So I think if it gets above the highs today where it was, I think intraday, like at the highs was just starting to peak above, you know, or trying to get to the top of that short term. So basically getting in the bulk about this range. I think that could have been actionable. I suppose you could treat it actionable from maybe doing a trend line on the way down from the top. But really, I think today's high would be where you, you know, would have been or just above it would be where you'd want to be buying.

15:07And it would still be relatively close to the 50-day line. You see the RS line is pretty close to highs there. So again, looking pretty strong. And that's some wobbly action. But ultimately, I think this has been pretty tight. So yeah, looking at that 348 level there is potentially actionable for Snowflake. How about we look at Microsoft, Ed? This one's been doing pretty well here. Especially, it seems like it took some time off. Sorry, it looks like my chart's not wanting to go there.

15:42Our chart wants to stay on Microsoft. Let me see if I can reload this here. But yeah, while I'm getting this back up, Ed, talk to me because Snowflake is in this area, and we've generally seen cybersecurity names doing well here. talked to an analyst this week about what could potentially disrupt this bull thesis. And the answer was pretty much when these stocks are priced for perfection, there's really not much room for error. So I think the big question is, particularly around cyber stocks like Snowflake, like Crowd,

16:22it's how much of this is already priced in. And we've got Microsoft back up. So, well, let me just get your thoughts on cybersecurity stocks before we move on. I agree. And I think in the interview you were talking about, it's like, is that when are the thing going to see the payoff? There's been a lot of rallying in anticipation that there'll be this big AI tailwind. And it hasn't happened yet, really. I mean, there may be some orders and other things, but I think people want to see, well, is it really going to live up to that hype? Yeah, so you're right. So that's just an issue out there. But cybersecurity is doing very well.

16:54Microsoft's doing well. It has sort of heard of this whole range over the last couple of months. But certainly from the last six weeks or so, you could sort of see they're sort of in there. It's been trying to peak out. I think if I can clear this messy range to sort of treat this as sort of a base. It was sort of getting up there, then it faded. So you'd like it to maybe get back up to today's highs or last week's or Monday's or last Friday's highs. But you can sort of see that sort of up and out there. Again, this one's struggling for a long time. Like if you scroll out or go to a weekly, this one is one that really wasn't doing well.

17:28Again, a lot of software names weren't doing for a while, but it's come back again with software. A mega cap software stock sounds pretty good right now. And that's what you've got here. They've done some things. They did things last week where they were doing some stuff with their co-pilot that seemed to get some positive market reaction to how that would go. The growth has been pretty solid lately. picking up on the earnings front. Revenue growth has been in the high teens. So, I mean, it's delivering some solid growth. It's not a jaw-dropping triple-digit, four-digit growth that we're seeing from some names, but this one is delivering pretty good growth here.

18:06So, yeah, right around being actionable. All right. So, yeah, we're looking if it could maybe clear above, what, this 519, 517 level? Yeah, I think so. I think getting just above that area would be actionable, still pretty close to what was basically a base. All right. Well, those were three main stocks today, Ed, but we had Micron earnings after the close here. Have you seen anything with those results? Yeah. I mean, strong beat. I think it was quadruple growth because I think the estimate was for like 940 and it beat by solidly. So I'm assuming that it was over a thousand percent growth. Not bad.

18:47The revenue growth was 379%, beating by nearly 3 billion, guided up significantly. But people were expecting that. They were expecting a significant guidance as well. So right now, Micron is up a fraction after hours the last time. Up 1%. And so this one is right around... I mean, you can sort of treat this area. I mean, it was a little messy, but if you can get above these short-term levels from the past week or so, that basically is a handle-by point. I mean, it may not meet the criteria exactly, but I think that would be something you could do. And then it'll be interesting to see how that applies to other memory stocks.

19:24And then just the AI trade as general. And we'll see. It could be that things reverse lower, that things reverse, you know, or surge overnight into the morning, definitely. But really important because this looks like smh there's a lot of things like this and smh may look a lot like micron after tomorrow as well and we'll just have to see which direction that is and there's also google i want to take a look at google they're not doing earnings uh of course but they released uh their latest ai model after the close and so that was rising a little bit so that's so those are a couple of things that might uh give give futures like at least the tech futures a bit of a boost uh overnight Yeah, and Google right at that 50-day line.

20:07So we'll be paying attention to that there, Ed. But that wraps it up for us today, Ed. Thank you, as always, for your terrific market insights. I really missed you. Nice being with you, Lexi. All right. Well, that wraps it up for us today. We'll be back tomorrow morning with IBD Live in the AM. You can head on over to investors.com slash IBD Live for all the details there. And yes, the long waking nightmare will be over. Ali Korm will be back tomorrow hosting SMT. So we all have that to look forward to. But thank you so much for watching, and we'll see you right back here after the close. Thank you.

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