OP Wire 7/9 (OP – Lite)

By Steve

Powell Heads to Capitol Hill

The spotlight turns to Capitol Hill on Tuesday as Federal Reserve Chair Jerome Powell starts two days of semi-annual Congressional testimony with an appearance before the Senate. Recent economic data suggests cooling inflation, and the job market shows signs that tight policy measures are impacting the economy. This has raised expectations of a potential interest rate cut by the Fed in September.

However, Powell insisted last week at the European Central Bank’s annual forum in Portugal that the Fed still needs more data to ensure inflation has moderated sufficiently. The latest consumer inflation report, due Thursday, will be closely watched. Powell faces the challenge of ensuring that price pressures are restrained without prolonging the period of elevated interest rates and harming the U.S. economy.

Futures Just Higher; S&P 500 Could Fall 10% – Morgan Stanley

U.S. stock futures edged higher Tuesday, continuing the recent positive trend ahead of key inflation data, Powell’s testimony, and the start of the quarterly earnings season. The S&P 500 and Nasdaq closed Monday at record levels, fueled by confidence that the Fed will soon ease monetary policy. However, Morgan Stanley Chief Investment Officer Mike Wilson predicts a 10% decline in the S&P 500 before the U.S. presidential election in November, citing uncertainty over interest rates and potential disappointing earnings.

Biden Stays in Presidential Race

President Joe Biden reaffirmed his commitment to stay in the presidential race, despite concerns about his mental fitness following a debate with Donald Trump. Biden assured Democrats in a letter and reiterated on MSNBC that he is determined to beat Trump in 2024. However, Stifel estimates there is still a 40% chance Biden will not seek reelection, calling this a “make or break week” for his campaign as Congress returns from recess.

Boeing Back in Spotlight

A United Airlines jet lost a landing-gear wheel on Monday during takeoff from Los Angeles but landed safely in Denver. This incident follows a similar one in March involving a United Boeing 777-200 jet. Additionally, the FAA is requiring inspections of 2,600 Boeing 737 airplanes due to potential oxygen mask failures. Boeing recently agreed to plead guilty to a criminal fraud conspiracy charge related to two 737 MAX crashes.

Crude Slips as Beryl Causes Little Damage

Crude prices edged lower Tuesday after Hurricane Beryl caused less damage to key U.S. oil-producing regions than expected. Early indications suggest most energy infrastructure along the Texan coast is unscathed. Market participants are also monitoring the Middle East situation, where hopes for a ceasefire in Gaza could reduce worries about global crude supply disruption. The American Petroleum Institute will release weekly crude inventory estimates later in the session, with a draw expected due to the summer driving season.

Reminder

Don’t forget this week’s live market analysis session hosted by Greg. More information will be announced soon. Stay tuned and keep stacking those gains!

Stock Updates

Netflix ($NFLX)

TD Cowen raised the firm’s price target on Netflix to $775 from $725 and keeps a Buy rating on the shares ahead of the Q2 report. The company continues to benefit from its paid sharing initiatives, strong underlying business demand, and a burgeoning advertising tier, the analyst tells investors in a research note. TD is positive on Netflix’s membership trends and market position with consumers heading into the quarterly report.

David Ellison wants to transform Paramount (PARA) into a modern media and technology giant capable of challenging Netflix (NFLX), reports The Financial Times. Ellison told the Times Paramount needs to move faster to adapt to technological shifts, from streaming to AI. “We recognize the transition that the broader industry is going through,” said Ellison. “In order to effectively navigate this transition, what is required for Paramount as a pure-play media company is to transition to becoming a media and technology company.”

Apple ($AAPL)

Piper Sandler analyst Matt Farrell raised the firm’s price target on Apple to $225 from $190 and keeps a Neutral rating on the shares following a change in analysts. Since early April, Apple shares are up over 30% on the back of Apple Intelligence excitement and a potential bounce back in iPhone shipments in China, the analyst tells investors in a research note. The firm says the excitement is warranted, as artificial intelligence “could be a needle mover for upgrades.” In addition, a return to growth in iPhone sales in China could create a tailwind as well in the second half, adds Piper. However, given the current valuation and the growing risk of a consumer spending headwind, the firm feels like “a lot of good news is already priced into the stock.”

BofA reports Apple’s App Store revenues in fiscal Q3 increased to $7.5B, or up 13% year-over-year, citing data on developer revenues from SensorTower. Total downloads were up 3.2% year-over-year to 8.4B during the same period, noted the analyst, who maintains a Buy rating and $230 price target on Apple shares.

Microsoft (MSFT) has told staff in China they must use iPhones (AAPL) for work starting in September, saying that Google (GOOGL) services like the Play Store are not available in China, Bloomberg reports. The measure is part of a companywide effort to strengthen Microsoft products and services against hackers and will impact hundreds of workers across the Chinese mainland, according to the report. It is intended to ensure that all staff use the Microsoft Authenticator password manager and Identity Pass app, according to an internal memo reviewed by Bloomberg News.

Nvidia ($NVDA)

KeyBanc raised the firm’s price target on Nvidia to $180 from $130 and keeps an Overweight rating on the shares. Despite the impending launch of Blackwell in 2H24, KeyBanc is not seeing any signs of a demand pause as demand for H100 remains robust, the analyst tells investors in a research note. In addition, the firm believes current demand for GB200 should support data center revenues of over $200B in 2025.

Trading Strategy

Today, I’ll be looking to scalp SPY/SPX puts on pops. If you have yet to email me your goals for 2024 so I can assist please do asap. Everyone in OP should be hitting goal or at least making huge improvements as we continue to perform as we’ll always have here! See you in chat!

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