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Futures for the Dow Jones industrial average, S&P 500 index and Nasdaq 100 indicated modest gains at Monday’s open following strong market gains last week. Investors will get a key reading on the U.S. economy Monday, with earnings from Advanced Micro Devices (AMD) on tap following Friday’s selloff in chip stocks.
Last week the Nasdaq composite rose 2.3%, its best showing since January, with the tech-heavy index hitting record highs. The S&P 500 index climbed 1.5% and the Dow Jones industrial average 1.9%, both close to all-time levels.
Futures for the Dow industrials rose near 0.2% vs. fair value. S&P 500 index and Nasdaq 100 futures climbed 0.2%. In overseas trading Monday, Japan’s Nikkei rose 0.6% while Australia’s S&P/ASX 200 climbed 0.55%. Many major Asian and European markets were closed for the international labor day holiday.
Advanced Micro Devices
Advanced Micro Devices is one of a handful of earnings reports on Monday, ahead of Tuesday, when Apple (AAPL), Mastercard (MA), Papa John’s (PZZA), a pair of fiber-optic plays and dozens more release quarterly earnings.
AMD is expected to report a 4-cent per-share loss after Monday’s market close, narrowing vs. a 12-cent loss a year earlier. Revenue should climb 18% to $984.38 million. For the full year, AMD is expected to turn an 8-cent profit vs. a 14-cent loss a year ago.
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AMD shares have been trying to get above their 50-day moving average, moving above that key support intraday on Thursday and Friday but turning back, falling 2.3% to 13.30 in Friday stock market trading.
AMD is working on a double-bottom base. A double-bottom pattern is a “W”-shaped consolidation in which the second leg of the W undercuts that first. As a result, AMD has a potential buy point at 14.85, jut above the center of the “W.”
AMD’s chips are used for PC gaming graphics as well as new AI uses. Its results and guidance may offer clues for rival Nvidia (NVDA), which reports on May 9.
AMD and Nvidia have similar-looking chart patterns at first glance. But there is a key difference. In Nvidia’s case, the second leg of the “W” did not quite undercut the intraday low of the first leg. That means it did not shake out as many weak holders as AMD’s true double-bottom. Thus, Nvidia’s potential buy point for now is 121.02, just above the old high. Nvidia’s stock has moved just above its 50-day line.
AMD’s report also will key for the chip sector, which has been a leading group but faltered at the end of last week. Intel (INTC), which just missed on sales late Thursday, fell 3.4%. But Apple chip supplier Skyworks Solutions (SWKS) and chip-gear maker KLA-Tencor (KLAC) sank 4.3% and 5.2% despite better-than-expected profits and sales.
Skyworks dragged down other Apple iPhone chipmakers, including Qorvo (QRVO), which fell 4.3%. Qorvo technically fell back into buy range but the heavy-volume decline to just below the 50-day line raises concerns. Qorvo reports earnings Wednesday.
For iPhone chipmakers generally, Apple earnings late Tuesday may be the big mover. Expect another quarter of slim profit and sales growth. Investors are betting on strong demand for the upcoming iPhone 8, and perhaps new buybacks and higher dividends from Apple’s huge cash pile.
The Institute for Supply Management will release its April manufacturing survey at 10 a.m. ET. Economists expect a slight dip to 56.5 from March’s 57.2. However, the ISM index has topped the Econoday forecast for seven straight months. Even an in-line reading would be well above the neutral 50 level.
On Wednesday, the Federal Reserve will wrap up its two-day policy meeting. Economists don’t expect any change in policy, but the central bank’s statement could offer clues about future meetings. The odds of a Fed rate hike by the June meeting are now at 63%.
On Friday, the Labor Department will release its April employment report.