What's Going On In The Stock Market?

Let's talk about the stock market. So happy Friday. Yesterday seemingly had a lot of good news in terms of earnings and many corners of the market actually performed well. But chip stocks and tech really overshadowed everything. So let's talk about what happened. Well, there were a host of earnings reports that looked good on paper. One of the most impactful was Taiwan Semiconductor or TSMC. TSMC manufactures some of the world's most advanced chips for Apple and Nvidia and basically everyone. And it posted a record quarter with profit up 77%, which sounds amazing, right? But the stock fell over 2% and it dragged the entire chip sector down 4.5%. AI adjacent names fell too. Why you might ask? Well, because TSMC announced it's increasing its spending on new production facilities, including plans to spend $100 billion on new factories here in the US. They are also ramping up production of a newer chip. And when you first start making something, it's always a little bit more expensive as you develop and learn the process. And that spooked investors who are really focused on margins and profitability for these chip companies. And who are already a little bit wary that we've seen recently in the chip sector after so many of these stocks have just skyrocketed just over the past two years. So any sign or indication that profit margins might shrink or that supply might start to actually balance out with demand has investors running for the doors and taking their profits while they can. The chip weakness pulled the Nasdaq down about a percent and a half, which was the worst of the major indices. Adding to the tech pain, Alphabet, Google's parent, fell more than 4% after news that its next big AI model has been delayed by after the Bell. Netflix reported it actually beat expectations too, but the stock is down over 9% in premarket trading this morning as of right now. And the reason was its forecast. Netflix is now expecting slightly slower growth ahead. And that was a real disappointment to investors. But yesterday was not a broad panic. In fact, only three of the 11 sectors in the S&P 500 were actually negative. Those were tech, communication services and consumer discretionary. Most sectors of the market actually rose. Money just rotated out of the crowded tech sectors and into safer, steadier corners like healthcare, consumer staples and real estate. So this really was a tech specific repricing, not necessarily a sign that the whole economy is in trouble. On the economy, the data was actually solid yesterday. Retail sales rose slightly, showing that consumers are pacing themselves but still spending. And jobless claims came in lower than expected. The bad news about that good economic data though is that with inflation still stubborn, strong data actually makes it a little bit easier for the Federal Reserve to keep rates high. Other stories worth knowing. Trucking giant JB Hunt rose 8% on a big pickup in freight and strong earnings. Lastly, Sweetgreen was down over 7% yesterday and is down over 22% this week as the recent parasite outbreak impacts stocks related to fresh produce. This morning futures are pointing lower after a sixth straight night of escalated tensions in the Middle East. Japan's market fell over 4% and oil is heading for an 11% gain on the week. So brace for a potentially bumpy open. If you find value in these updates, please consider liking, subscribing or sharing with someone you know.