Bullish sentiment in U.S. stocks has returned these past couple of days.
The previous day was ignited by AI earnings, and today the baton was passed to the PPI.
U.S. July PPI was flat month over month, below the forecast of +0.2%. Year over year, PPI eased from 5.5% to 4.7%, and core PPI was only +0.2% month over month as well.
Combined with yesterday’s relatively mild CPI, market worries about the Fed raising rates again in September have further eased. The yield on the 2-year U.S. Treasury has fallen to around 4.16%, and the 10-year yield is also down to the 4.65%–4.68% zone. The S&P 500 continues to probe near all-time highs.
On the other hand, AI is still the strongest theme.
AI cloud computing companies $CRWV
After the earnings release, they rose about 19%, $SMCI rose about 16%, and AI infrastructure names such as $NBIS, $IREN, and $APLD also moved higher across the board.
At least based on these companies’ orders and revenue, big enterprises’ spending on AI computing power and data centers has not shown any clear slowdown. AI Capex is also gradually turning into real performance for upstream firms.
However, $CSCO ’s price action is also a reminder for the market.
Even though revenue and earnings both beat expectations and AI infrastructure orders continue to grow, gross margin fell from 68.4% to 66.3%, yet the stock was down nearly 6% before the open.
This suggests that going forward, investors may focus more on whether revenue growth can truly translate into profits, rather than just looking at order growth and revenue growth rates.
On other fronts, the Pershing Square fund under Bill Ackman reportedly re-bought about 3.15 million shares of $NFLX , and believes that Netflix has basically won the streaming wars.
When you put these two days’ trading together, the market is actually pricing in a fairly ideal combination:
AI demand hasn’t clearly slowed, while inflation is cooling; corporate growth expectations are still intact, and pressure from continued Fed rate hikes has eased somewhat.
That said, the S&P 500 is already close to its historical high. The 10-year Treasury yield is still above 4.6%, and AI infrastructure companies can easily jump by a dozen-plus points in a single day. Next, beyond growth, you can’t afford to miss any of the following: profit margins, valuation, and interest rates.
The previous day was ignited by AI earnings, and today the baton was passed to the PPI.
U.S. July PPI was flat month over month, below the forecast of +0.2%. Year over year, PPI eased from 5.5% to 4.7%, and core PPI was only +0.2% month over month as well.
Combined with yesterday’s relatively mild CPI, market worries about the Fed raising rates again in September have further eased. The yield on the 2-year U.S. Treasury has fallen to around 4.16%, and the 10-year yield is also down to the 4.65%–4.68% zone. The S&P 500 continues to probe near all-time highs.
On the other hand, AI is still the strongest theme.
AI cloud computing companies $CRWV
After the earnings release, they rose about 19%, $SMCI rose about 16%, and AI infrastructure names such as $NBIS, $IREN, and $APLD also moved higher across the board.
At least based on these companies’ orders and revenue, big enterprises’ spending on AI computing power and data centers has not shown any clear slowdown. AI Capex is also gradually turning into real performance for upstream firms.
However, $CSCO ’s price action is also a reminder for the market.
Even though revenue and earnings both beat expectations and AI infrastructure orders continue to grow, gross margin fell from 68.4% to 66.3%, yet the stock was down nearly 6% before the open.
This suggests that going forward, investors may focus more on whether revenue growth can truly translate into profits, rather than just looking at order growth and revenue growth rates.
On other fronts, the Pershing Square fund under Bill Ackman reportedly re-bought about 3.15 million shares of $NFLX , and believes that Netflix has basically won the streaming wars.
When you put these two days’ trading together, the market is actually pricing in a fairly ideal combination:
AI demand hasn’t clearly slowed, while inflation is cooling; corporate growth expectations are still intact, and pressure from continued Fed rate hikes has eased somewhat.
That said, the S&P 500 is already close to its historical high. The 10-year Treasury yield is still above 4.6%, and AI infrastructure companies can easily jump by a dozen-plus points in a single day. Next, beyond growth, you can’t afford to miss any of the following: profit margins, valuation, and interest rates.