The Daily Breakdown looks at Intel as shares rocket on a $5 billion deal with Nvidia. Let’s also touch on the Fed’s first rate cut of 2025.
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What’s Happening?
As expected, the Fed cut rates by 25 basis points yesterday and markets were…pretty flat. The S&P 500, Nasdaq 100, and Bitcoin finished slightly lower on the day, and even though small caps were up 2.5% at one point, the Russell 2000 finished higher by just 0.3%.
This morning’s looking like a different story.
Small caps — via the IWM ETF — are leading the charge, with the SPY and QQQ ETFs set to open at record highs based on pre-market trading. The question is, can the gains be sustained?
Recall the last Fed meeting, where stocks finished slightly lower on Wednesday (the day of the meeting), rallied about 1% on Thursday morning, then finished lower on the day and tumbled on Friday. We may not see that type of reaction this morning, but remember that pre-marketing pricing is not always indicative of how the day will go.
Now What?
The Fed delivered exactly what investors were looking for — a 25 basis point cut yesterday with expectations calling for two more cuts by year-end. Will these in-line results be enough to sustain markets higher through September?
Confidence would likely be higher if Bitcoin and Ethereum were trading better this morning, but both are fairly muted as of 8 a.m. ET.
Regardless, while the short-term price action can be noisy, the structural integrity of the bull market can remain intact if the economy avoids a recession and earnings expectations continue higher. Historically, rate cuts in non-recessionary environments tend to be a positive catalyst for stocks.
Specifically, investors may want to keep an eye on tech, small caps, housing-related stocks, real estate, gold, and Bitcoin.
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The Setup — Intel
Shares of Intel are exploding higher this morning on news that Nvidia will invest $5 billion into the firm as the two companies will reportedly co-develop chips for certain applications. In response, INTC stock is up roughly 30% in pre-market trading — sending shares right into the 200-week moving average.
Notice how the $25 level was key support in 2022 and 2023, then key resistance in 2024 and 2025. Now clearing this level, Intel is making a massive leap. If there’s profit taking near current levels, bulls will want to see the $30 area hold as support, otherwise more selling pressure could ensue. On the flip side, a move above the $33 to $34 area could bring in more bullish momentum.
Options
For some investors, options could be one alternative to speculate on INTC. Remember, the risk for options buyers is tied to the premium paid for the option — and losing the premium is the full risk.
Bulls can utilize calls or call spreads to speculate on further upside, while bears can use puts or put spreads to speculate on the gains fizzling out and INTC rolling over.
For those looking to learn more about options, consider visiting the eToro Academy.
What Wall Street’s Watching
FDX
FedEx will report earnings after the close. Analysts expect the firm to report adjusted earnings of roughly $3.59 a share on revenue of $21.6 billion. So far for the year, shares are down almost 20%. Will earnings reverse its trend? Dig into FedEx’s fundamentals.
UBER
Shares of Uber hit a record high on Tuesday, then tumbled 5% yesterday amid reports that Lyft will partner with Alphabet’s Waymo unit, which focuses on autonomous driving. While this space is still in early stages — and includes Tesla — competition is heating up. Check out the chart for UBER.
ASML
Shares of ASML are up more than 7% so far this week and are higher by another 7% in pre-market trading today, as investors hope ASML can notch its third straight weekly gain. If this morning’s gains hold, the stock will be up about 30% amid its win streak. For a refresh on ASML, here’s our Deep Dive.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.
