History is made

By Hoda Mehr Tue, Jul 2, 2019

What you need to know?

G20 Summit came and gone, the U.S. and China negotiations continued, a sitting American president walked over the border of South and North Korea, leaders of the several countries shook hands and took pictures, and OPEC extended its oil production cut for another 9 months.

Okay, we can breathe now. That’s certainly what investors and the stock market did on Monday. The stock market took the lack of bad news as a good sign and inched up higher, again.

What does it mean for investors?

We all love to see the green upward arrows, especially if they are sitting beside our investment portfolios. While it looks like there is no end to this market recovery, it doesn’t mean you can invest carelessly. There are always reasons to be cautious when the stock market is rallying upward. We’ve heard it too often, but that doesn’t make it any less true. Stay optimistically cautious, so that upward or downward, you’ll be alright.

• U.S. markets: Both the Dow and the S&P 500 indices finished Monday higher than where they started the day. Also, the semiconductor stocks had a great Monday and fueled the Nasdaq’s one-day gain to 1.12%. Scroll to the Overall Market section to read more about what happened. 
• Cryptocurrency: Bitcoin is yo-yo-ing up and down. The prices trended downward and Bitcoin’s price was back to mid $10,000 in the early hours of the evening on Monday. People taking some of their recent gains off of the table can be the main reason for the decline. No news is really definitive in the crypto market.

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Maybe Huawei is our friend, after all.

What happened on Monday? 

Similar to the S&P 500 and the Dow, the Nasdaq index grew higher on Monday’s market close. The positive performance of the stock market came after the news that the U.S. and China leaders are adamant about reaching a trade agreement and no additional tariffs will be levied on the Chinese goods, not until another 6 months. But, the Nasdaq had a better day for one other reason.

Most technology and semiconductor stocks are listed in the Nasdaq stock exchange in the U.S. and they were hit sharply because of the product sales restrictions and limited to Huawei, the world largest telecommunication company that happens to be entrenched in the U.S. – China trade disputes. But, in his remarks after the G20 meetings, President Trump talked about easing the trade pressure and restrictions on Huawei, which may mean the American semiconductor and technology suppliers can once again resume selling their products to Huawei.

Now What?

The semiconductor stocks are volatile investments by nature. Last few months were all about Huawei. If history has any lessons for the stock market investors, the easing of the Hauwai concerns will not remove all the reasons for volatilities. If you are a semiconductor investor, the best course of action is to wait for a market downfall, similar to what we have had in the past few months, and enjoy the upward growth when the market celebrates days like Monday. There will be another cyclical, technological or political news that will end up dragging these stocks’ price down.

Remember, the stock market always rhymes with its history, and fluctuation is the rhythm of the market.

Buy me a new wafer-maker. 

You’ve heard of a waffle-maker, but what is a wafer-maker? Well, a wafer is a thin slice of semiconductor used for the fabrication of integrated circuits and, in photovoltaics, to manufacture solar cells. Today, one of largest makers of equipment used to make semiconductors, Applied Material (Ticker: AMAT), acquired another wafer-maker, KKR & Co Inc (Ticker: KKR) for more than $2 Billion.

The acquisition, if goes through, will make AMAT an even bigger player in the semiconductor equipment industry, and that’s what investors like to see. The stock price rallied during the day and ended Monday 1% higher. Similarly, KKR investors celebrated the acquisition and the stock closed the day higher than where it started.

But we fixed it. 

Boeing (Ticker: BA) is back in the news. The company has confessed to falsifying the documentation provided to Air Canada about a reported fuel leak issue with one of the company’s 737 jets. Boeing was quick to mention that the incident was an isolated occurrence and the company has taken immediate corrective actions.

Even if it is true, no one wants to hear such excuses from an aircraft manufacturer that is being investigated for two deadly crashes. The stock was, of course, down more than 2% on Monday as investors are getting tired of hearing about such incidents at Boeing.

Real life is not a scene from RoboCop. 

So, what happened? 

Facial recognition has been the cornerstone of all futuristic movies where the authorities have their fingers on the pulse of cities by recognizing everyone’s faces. We have arrived at the day and age that it is now possible to bring such scenes from sci-fi movies to the streets where we all live. The story has created controversial debates across several major cities around the U.S.

On Monday, Axon Enterprise Inc (Ticker: AAXN) that manufactures teasers and body cameras for the U.S. police force has rejected the likelihood of selling facial recognition software and hardware, at least for now. The decision is to postpone such a product line until the company can further investigate its ethical implications. Looks like for now, none of us will be featured in a real-life version of RoboCop, the movie.

About the Author

The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card