Next Day Prep: Hot PPI Data Rattles Market, Mega-Caps Save Day
A quick analysis of today’s market outlook and key trading opportunities to start your day.
Intro & Market Mood
Welcome to Next Day Prep – What We Are Watching Tomorrow. Today’s market was a mix of highs and lows, with the S&P 500 reaching a new record high but facing underlying weakness.
Overnight Headlines
The session was influenced by a surprising rise in the Producer Price Index, diverging from expectations and casting doubt on the likelihood of a significant rate cut in September.
Economic Announcements
July’s PPI report showed a sharp increase of 0.9%, overshadowing the previous positive CPI report and leading to a shift in market sentiment regarding potential rate cuts.
Earnings Highlights
- AAP (Advance Auto Parts) saw a significant 8% decline despite beating Q2 earnings expectations, attributing lowered guidance to future challenges in the auto parts industry.
- Ibotta received multiple downgrades, indicating negative sentiment, while Cisco stood out with solid earnings and positive guidance in the tech sector.
Top Movers
Market movement was heavily influenced by mega-cap tech stocks like Amazon, Meta, and Alphabet, which buoyed the indexes despite broader market declines.
Quick Trade Ideas
- Consider Amazon (AMZN) for continuation trading due to strong relative strength and leadership qualities.
- In the energy sector, watch BE (Bloom Energy) for a breakout opportunity at $44.50 targeting $46, based on momentum indicators.
- Anticipate potential breakouts in housing sector stocks like D.R. Horton (DHI) at $170 and Lennar, observing their resilience despite rate concerns.
- For tech traders, monitoring Apple (AAPL) for consolidation breakout around $232 could lead to further upside towards $235 and beyond.
Key Takeaway
Traders need to stay nimble in a market with conflicting signals. Focus on established leaders, sector-specific tactical plays, and be mindful of the divide between mega-caps and broader market performance.