flows into Micron effect despite longest shutdown ever

11/06 U.S. stock markets rise as repulsive buying flows into Micron effect despite longest shutdown ever

The U.S. stock market started mixed amid controversy over high valuation, but rose after rumors spread that the Democratic Party had asked Trump for negotiation talks. Of course, as interest rates on government bonds rose on solid economic indicators, some were put on sale, but the strong trend continued due to buying focused on some stocks such as semiconductors. In particular, Micron (+8.93%) surged, driving the rise of semiconductor stocks. As a result, the recent market, which fell amid controversy over AI’s high valuation, was left behind and acted as an upward factor. However, as Nvidia (-1.75%) shifted to supply and demand factors ahead of the market close, the index returned some of the gains, and the index continued to remain unstable (Dow +0.48%; Nasdaq +0.65%, S&P 500 +0.37%, Russell 2000 +1.54%; Philadelphia Semiconductor Index +3.02%)

*Variables: Interpretation of Employment and Service Economic Indicators

The U.S. ISM service index improved from 50.0 to 52.4, with business activities (54.3) and new orders (56.2) rising, indicating a recovery in demand. The employment index (48.2) contracted and the backlog of orders (40.8) fell to the second lowest level since 2009. The price index was 70.0 to the highest since October 2022, facing pressure from companies to increase prices amid concerns over tariffs and shutdowns. Meanwhile, ADP private employment improved by 420,000 cases, but the increase was mainly concentrated on large companies (+74,000 cases). By industry, trade and transportation (+47 million), education and healthcare (+2.5 million), and finance (+1.1 million) led employment, while leisure and hospitality (-0.5 million), IT (-1.7 million), and professional business (-1.5 million) decreased. ADP evaluates that private employment has increased for the first time since July, but the increase is insignificant, and wage growth has remained almost unchanged for more than a year

Looking at the two indicators, we ordered and imported large-scale products to prepare for demand for the year-end shopping season, and arrived at the port in the third quarter. This increased related employment due to increased logistics, and is estimated to have increased employment by companies for online sales. In fact, when the year-end shopping season begins in earnest, online orders surge, and domestic delivery workers are hired in the form of temporary workers. Eventually, as employment indicators and price indices rise, interest rates on government bonds rise and the dollar strengthens.

Meanwhile, the New York Fed reported a 1.1% increase in household debt in the third quarter compared to the second quarter. In particular, the credit card delinquency rate reached 12.41 percent, the highest since 2011. The increase in delinquency rates led to increased foreclosures and bankruptcies. After all, contrary to the apparent indicators, the household sector is experiencing increasing economic stress and vulnerability, and Treasury Secretary Bassett’s recent remarks that those below the middle class are already shrinking to the level of a recession. This is why while the importance of economic indicators is important, sluggish stock market could also slow down consumption of high-income earners, adversely affecting the economy

*Featured Stocks: Nvidia Downturns, Micron Surges, Tesla Bullish

Semiconductors: Nvidia Turns Down Amid Still AI Overvaluation Controversy Ahead Of Market Closure
Nvidia (-1.75%) rose during the day despite the news that the Chinese government has banned foreign AI chips from state-funded data centers. In particular, Foxconn, which manufactures Nvidia’s servers, saw its sales increase 11.3% year-on-year in October. Foxconn announced that AI accelerated, driving its sales expansion. However, as the controversy over its overvaluation still remains unresolved, it digests products unlike other semiconductor companies and turns downward just before the market closes. AMD (+2.51%) fell in the aftermath of a weaker margin despite better-than-expected earnings, but still rose on the back of continued buying. It is estimated that Wccftech’s announcement that the price of Intel (+3.65%) and AMD’s AI chips is rising due to increased demand and reduced supply chains was affected. This increase shows that the ripple effect of AI is no longer limited to high-performance GPUs but is also expanding to CPUs. Broadcom (+2.00%) also shrank its rise

Semiconductors: Micron Rises Reflecting Semiconductor Supercycle Expectations
Micron (+8.93 percent) is leading the rise of semiconductor companies. Citigroup raised its target price to $275 last week, but contract price is expected to rise 25% quarter-on-quarter amid surging DRAM spot price. Institutions have recently reported an increase in target stock price for Micron, and overall investor sentiment is strong. Micron plunged the previous day amid controversy over AI’s high valuation, but the “semiconductor supercycle” issue reignited. Micron rose sharply, followed by RAM Research (+5.95%), AMAT (+4.65%), Western Digital (+5.20%), and Seagate (+10.14%). The Philadelphia Semiconductor Index rose 3.02 percent. Qualcomm (+3.98 percent) fell by 2 percent after-hours, highlighting that it failed to meet market expectations despite better-than-expected earnings results. ARM (-0.34%) is up by 4 percent after-hours on better-than-expected earnings

AI: Super Microcomputer Slump Vs. Big Bear AI Rise
Super Microcomputer (-11.33%) reported mixed results, especially in that its EPS was sluggish, which caused profitability problems. Arista Network (-8.55%) fell in the wake of disappointment with guidance and sluggish margin despite good earnings reports. Some cloud-related companies, including Datadog (-1.61%) and Cloud Flare (-1.89%), fell. Recreation Pharmaceuticals (-0.80%) turned lower in the second half of the session despite news that its financial concerns eased, with its cash equivalents surging despite a sharp drop in sales. With Big Bear AI (+6.98%) showing strength, Paladine AI (+5.50%), Soundhound AI (+3.90%), UI Pass (+1.96%) and C3AI (+1.84%) also showing solid performance

Automobiles: Tesla Rises Ahead of Shareholders’ Meeting
Tesla (+4.01%) rises ahead of shareholders’ meeting. In addition, although Xiaopeng (-3.97%) hosted AI Day and explained its plans to build AI-trained humanoid robots, the influx of assessments that the threat of competition with Tesla was not so great