PRE-MARKET SNAPSHOT
Futures are firmly green this morning after June CPI cooled to 3.5% year-over-year — well below the 3.8% consensus estimate and a sharp drop from May's 4.2%. SPY is up 0.46%, QQQ up 1.45% pre-market, with markets opening in under an hour.
WHAT YOU NEED TO KNOW
The cooler CPI print reignited the semiconductor/memory rally that stalled earlier this week — Applied Materials, SanDisk, Lam Research, Micron, and Western Digital are all up 5-7%+ pre-market.
The most interesting story of the morning, though, is IBM. The company issued a preliminary earnings warning — revenue of $17.2B, up just 1% year-over-year and well short of expectations, with shares down over 20%. CEO Arvind Krishna was candid about why: clients shifted capex toward securing memory and storage supply ahead of expected price increases, and a wave of large deals failed to close as a result. It's a striking real-world data point on just how tight the memory/storage supply crunch has become — tight enough to blow a hole in IBM's quarter.
That's likely playing into today's other big divergence: enterprise software names (Workday, Atlassian, ServiceNow, Accenture, Intuit, Adobe, Salesforce) are all down 5-10% this morning, in sharp contrast to yesterday's SaaS rally. Whether that's investors drawing a direct line from IBM's warning to the broader software group, or just sympathy selling, the split between "hardware/memory up, software down" is the clearest sector story on the tape today.
Bank earnings are in, and the reaction is mixed rather than uniformly positive: Goldman Sachs is the standout at +4.2%, while JPMorgan, Bank of America, Wells Fargo, and Citigroup are all trading lower despite reporting this morning.
MOMENTUM PLAYS
AMAT, SNDK, LRCX, MU, WDC — broad-based memory/semiconductor strength, extending on a cooler-than-expected inflation print.
TODAY'S CALENDAR
Market opens 9:30am ET | Fed Chair Kevin Warsh testifies before Congress today — first public appearance since the June meeting | GS, JPM, WFC, C, BAC have already reported
TRADER'S NOTE
Today is a genuine reminder that "the market is up" and "every stock is up" are two different things — semis and banks are telling completely different stories than software this morning, and IBM's own words are a rare, direct data point on how real the memory shortage actually is for the companies caught on the wrong side of it.
DISCLAIMER
This newsletter is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.