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Where SOX Go, Stocks Go: A Cyclical Canary to Watch in the Market Coal Mine

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Where SOX Go, Stocks Go: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Where SOX Go, Stocks Go: A Cyclical Canary to Watch in the Market Coal Mine

Futures are modestly higher thanks to solid earnings and ahead of important central bank decisions and economic data later today.

Taiwan Semiconductor (TSM) beat earnings and is rallying 8% pre-market and that’s boosting tech and futures.

Today will be a busy day on the economic and earnings front, starting with the ECB rate decision, where the ECB is expected to cut rates 25 bps and signal an openness (but not a guarantee) of another rate cut in December.

Economically, there are several potentially important reports today including, in order of importance, Retail Sales (E: 0.3%), Jobless Claims (E: 260K), Philly Fed (E: 3.0) and Industrial Production (E: -0.1%).  With all of today’s data, Goldilocks readings around expectations are the best case for markets.

Finally, earnings season continues to roll along and NFLX (E: $5.09) after the close is the big report today.

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Semiconductors: Bull vs. Bear Case (Important for the Market)

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Semiconductors: Bull vs. Bear Case: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Semiconductors (SOX): Bull vs. Bear Case

Futures are modestly higher and are extending Thursday’s gains following a mostly quiet night of news.

Most of the early rally this morning is due to momentum from Thursday’s surge in stocks, but Taiwan Semiconductor (TMSC) also gave a positive July revenue update which is boosting tech/AI sentiment and supporting markets.

Geo-politically, a retaliatory attack from Hezbollah and/or Iran on Israel remains imminent and we shouldn’t be shocked if geo-political risks rise over the weekend.

Today there are no notable economic reports nor any Fed speakers so trading should be driven by technical factors and the yen, and as long as the yen doesn’t rally, stocks should be able to hold Thursday’s gains.

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