As major averages snapped a three-day losing streak, investors are keenly focused on key earnings reports and sector movements. AT&T and PulteGroup will report before the bell, while tech giants Alphabet and Tesla are set to announce after market close, with analyst insights suggesting high expectations for Alphabet but caution around Tesla’s valuation. Meanwhile, the semiconductor sector saw significant gains, prompting strategic advice from Jim Cramer amidst recent highs and sharp corrections for many chipmakers.
As Wall Street braces for another active trading session, investors are keen to identify the companies and sectors poised to influence market direction. After the major averages successfully snapped a three-day losing streak, attention now turns to a series of significant earnings reports and the ongoing volatility within the crucial semiconductor industry. CNBC's 'Stocks @ Night' provides a crucial early look at the stocks likely to make headlines.
Key Earnings Ahead: Morning and After-Bell Reports
The earnings calendar for Wednesday is packed with market movers:
- AT&T (T): Reporting during 'Squawk Box' in the 6 a.m. hour, AT&T's stock has faced headwinds, down 14% over the last three months and a significant 25% from its September high. Investors will be scrutinizing its latest performance amid these declines.
- PulteGroup (PHM): Also reporting on 'Squawk Box' in the 6 a.m. hour, the homebuilder's stock has seen a 3% decline over three months and is off 14% from its February 17 high.
- Alphabet (GOOGL): The tech giant is set to report after the bell. While up 4.5% in the last three months, it remains 15% off its May 18 high. Insights from StockStory, a platform partnered with CNBC, highlight Alphabet's strong position: "Alphabet's dominant Google Search sits on the pantheon of the best businesses ever. This is reflected in its robust long-term revenue growth and elite operating margin." However, its trading multiple of 27.3x forward price-to-earnings is "lofty," indicating high expectations. Implied volatility for the stock is currently 6%, and last quarter saw a significant surge post-earnings, setting a high bar for this release.
- Tesla (TSLA): Also reporting after the bell, Tesla shares are down about 2% in the last three months, 24% from their December high, and roughly 16% year-to-date. StockStory offers a more cautious outlook: "There are better opportunities than Tesla," noting that the "current multiple is quite expensive, especially for the fundamentals of the business."
The Chips Are Down, Then Up: Cramer's Semiconductor Strategy
The semiconductor sector experienced a notable resurgence on Tuesday, with the popular VanEck Semiconductor ETF (SMH) climbing 4.5%, contributing to a 5% gain over two days. Despite this recent uplift, SMH remains 13% off its June 22 high.
- Individual chipmakers saw significant movement: Teradyne and Micron were Tuesday's big winners, both up 12% in the session, though still down 22% from their respective highs.
- Intel and Advanced Micro Devices (AMD) also gained 8% on Tuesday, but Intel is still off 26% from its June 30 high, and AMD is down 7% from the high reached on the same day.
Jim Cramer of "Mad Money" weighed in on the sector's volatility, stating, "We always forget that when we get a big pop in semis, it is a good opportunity to re-position." He noted the impressive long-term performance, with SMH up over 100% in a year, and many individual stocks seeing even larger gains. However, Cramer also issued a warning: "Don't get blown out by just owning semis," advising caution against overconcentration.
The "Parabolic Seven" and Their Recent Corrections
Even with Tuesday's gains, several prominent tech and chip stocks, dubbed the "Parabolic Seven," have seen significant pullbacks from their recent highs, presenting potential entry points or continued cautionary tales:
- Sandisk: Down 32% from its June high.
- Micron: Off 22% from its June high.
- Intel: Down 26% from its June 30 high.
- AMD: Down 7% from its June 30 high.
- Marvell: Off 36% from its June 18 high.
- Dell: Off 14% from its June 1 high.
- Broadcom: Down 22% from its June 3 high.
These fluctuations underscore the dynamic nature of the current market, where strong fundamentals meet periods of sharp corrections, keeping investors on high alert for both opportunities and risks.
