The markets responded well to the U.S. Bureau of Labor Statistics reporting a monthly drop in inflation. The Consumer Price Index fell 0.4%. It benefited from a sharp drop in energy prices.
July’s energy market is sharply different. Tensions resumed, if not worsened, shortly after the U.S. Fourth of July holiday ended. Investors who bought Valero (VLO) or Exxon Mobil (XOM) should get rewarded as oil prices hold the $80/bbl level.
Prediction markets increased the odds of the Fed holding rates. Bond investors could trade the rebound in the 7-10 year Treasury Bill (IEF) or the 20+ year duration one (TLT).
The rotation out of software stocks is gaining momentum. After the strong rally in SK Hynix (SKHY) on the day of its IPO, investors dumped Salesforce (CRM), Adobe (ADBE), and AutoDesk (ADSK). Although Zscaler (ZS) and CrowdStrike (CRWD) attracted buyers, traders preferred chip companies.
Investors who prefer a domestic firm would consider Micron (MU) over SKHY shares.
The hot chip stocks for trading included AMD, NVIDIA (NVDA), and Taiwan Semiconductor (TSM). Investors also snapped up Dell Technologies (DELL), SanDisk (SNDK), Lam Research (LRCX), Applied Materials (AMAT), and Intel (INTC).
Bank stocks fell after posting results. Citigroup (C) dropped by 5.29%, creating a good entry point. Wells Fargo (WFC) dropped by 2.71% after posting strong net interest income in Q2. WFC stock is also an attractive holding.
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