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Micron goes volatile on great news (0:20) SpaceX the bellwether (2:45) Fed interest rate commentary (4:40) Light week coming (7:11)

Transcript

Rena Sherbill: Brian Stewart, our director of news. Welcome back to another week of Wall Street Roundup. Are we starting with tech?

Brian Stewart: I think Micron (MU) was the big news this this time around so we should we should jump in there.

Market reaction was interesting, taking it in broad terms. Micron reported better than expected results, revenue more than quadrupled from last year to forty-one billion dollars about.

Strong guidance. They said AI demand is still accelerating, however, supplies remain tight. So basically the exact market you'd want for the company. Stock was up sixteen percent on earnings, but the follow-through through the sector in general was much more muted.

Also you're seeing a situation where Micron has gotten more volatile in recent days. It rallied on Monday, hit a new high, and then we had the general market sell-off, tech worry sell-off on Tuesday, which Micron was down pretty sharply, and then down double digits.

And then you saw the pop back up after the earnings. So you saw Micron set a new high on Monday, beat that new high right after its earnings. But then the stock is down today and is below where it was obviously at its high, but also below the high that it reached on Monday.

Meanwhile, you have other stocks. If you look at the the general tech space this time around, you take the the large cap winners in the past week, you see a very defensive situation. So you see Merck (MRK), J&J (JNJ), Lilly (LLY), Home Depot (HD), Coke (KO). These are the stocks that have been showing strength in the past week.

And then on the downside, you see stocks like (ARM) and Oracle (ORCL) and Palantir (PLTR). So basically your AI set falling behind. And that's despite the fact that you have Micron as a catalyst.

So the overall reaction to Micron, if you could summarize it, is something like this is an A +++ earnings report, could not be better. However, after some reflection, a lot of this was already baked into the style.

Rena Sherbill: So much is priced in. So much is priced in already.

Brian Stewart: That's worrisome if you're a bull, just in the sense that if a super blockbuster quadrupling of revenue earnings report is already priced into the stock, there's not a lot that isn't priced into the stock. So you're looking to a situation where one stumble could make a big downside.

Rena Sherbill: Check out Investing Experts Podcast to see what to do with your money instead of going into those stocks.

Update on SpaceX? Where are we at with it?

Brian Stewart: I remember a while ago we talked about Tesla (TSLA) every week and I think Elon Musk just has a gift for putting his stock top of mind all the time.

I think SpaceX (SPCX) is becoming a proxy for people's opinions about optimistic tech, future tech. The stocks that are more about promise than they are about the current revenue stream, I think SpaceX is becoming the bellwether for that.

Recently they priced IPO at $135 a share, it opened at $150, rallied to around $225, and now it's back down to just over $150. So it's basically back to where it started. Still above its IPO price, but in terms of where it opened, it's pretty much just on a round trip.

The catalyst for the recent dip has been it's selling twenty-five billion dollars in bonds. This is after it made eighty six billion dollars off of its IPO. So $75 billion in the initial, and then the overdraft for that got it up to eighty-six. So the company now has more than a hundred billion dollars in cash from from all these cash raises.

And I just think this played into the narrative of the hyperscalers flooding the market with these bonds. I just think there's a worry that this is all kind of frothy. There's a sign that maybe these companies are getting as much cash as they can at the top of the market. They know something we don't kind of thing.

So that was the initial catalyst for sending it down. If you look at the tech stocks in general, I thought Wedbush had an interesting way of framing it. They called it an air pocket market. So basically the pilot's coming on saying there's turbulence ahead, we're gonna stop beverage delivery or whatever they call it. I think that's the market we're in. Like buckle your seatbelts because we we might hit some pumps.

Rena Sherbill: To wit, OpenAI (OPENAI), I saw a report about them considering delaying their IPO due in part to the pullback in in SpaceX and investor sentiment, etc. Interesting to see various consequences from this frothiness.

We talked about it on this morning's Wall Street Breakfast podcast about Neel Kashkari coming out with some comments.

I don't know if you saw it, it just was released that widespread inflation led him to pencil in one interest rate hike this year in the Fed's June dot plot. So it now expects no reduction in its policy rate in 2026.

Any thoughts there?

Brian Stewart: I think it just highlights that interest rates are going to kind of take over. Well not take over, but I think co-lead for the movie that's going to be the stock market for the next few weeks is going to be AI and then interest rates. I think that's going to be the major debate.

Inflation has been stubbornly high. You see oil prices coming down sharply from their peaks because we've reached at least a temporary end to the Iran situation.

And so the the question is how much damage was done during the time period where the Strait of Hormuz was closed? Was it just a blip? Are we going to heal very quickly and get back to normal and start seeing inflation come down?

Or is that inflation still gonna work its way through the system and it's gonna be stuck high for a long period of time? The Fed has been in a wait and see mode lately though I think in Warsh's first meeting there were some hawkish signs, which is interesting because I think in the initial nomination process, there was hope that he was coming in as a dove.

Warsh seems to favor less communication. He's famously a skeptic of the dot plot. The statement that they issued was the shortest in recent memory. So it'll be interesting for the market to get used to less information from the Fed.

Now they'll still be - you're talking Kashkari, you're still gonna get that individual commentary from it, but you have to weigh those in, Kashkari can't make the decision on his own, right? This is a a team effort.

And so balancing the hawks and the doves and the different forces that go into this decision making, it's gonna get more complicated, or at least there's gonna be a learning curve as we get used to how the Fed is going to do its communications.

Rena Sherbill: What else you got for us this week? Or next?

Brian Stewart: Next week is gonna be pretty light. We got the the holiday at the end of the week. There's really not many earnings. We have Nike (NKE) coming out, so we're gonna get a little bit of information about the consumer.

We have General Mills (GIS), which is another kind of consumer data point coming out, and then not much else.

You have the jobs data coming out. I think that's gonna be a big one. Recent jobs data has pointed to a relatively healthy jobs market. So I think investors are gonna be looking to whether that holds up.

I think the worry there, it's kind of like good news is bad news situation. The the stronger the the job market is, the more of a green light the Fed has to raise rates to fight inflation. So the response, the market response to the jobs data might be counterintuitive in the moment.

We'll have to test what the market sentiment is. And so I think the jobs data will be a good point.