Tensions flare in the Middle East, while earnings and key macro data is released in the final full week of Q2. The Daily Breakdown digs in.
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Monday’s TLDR
NKE, MU report earnings
GDP, PCE in focus
TSLA gains on Robotaxi launch
Weekly Outlook
We’re in the last full week of Q2 and there’s plenty to focus on as the quarter-end nears next Monday.
First, geopolitical tensions are high after the US launched a strike against Iran over the weekend.
As crass as it may sound, the markets are not worried about how they come across to compassionate and empathetic people. In that vein, geopolitical issues are often shrugged off as non-events by capital markets, despite the devastating impact it can have on society.
We’re seeing that today — whether that’s as Bitcoin is holding above $100K or the relatively muted reaction in the SPY and QQQ ETFs. Let’s see how markets handle the geopolitical-related headlines this week.
Second, earnings season will start up in a couple of weeks, but there are still a few stragglers. This week’s bunch includes Carnival, FedEx and BlackBerry on Tuesday, Micron and General Mills on Wednesday, and Walgreens and Nike on Thursday.
Third, it’s actually a pretty busy week of economic data.
The consumer confidence data will drop on Tuesday, the final Q1 GDP reading will be released on Thursday, and the PCE report — the inflation report the Fed watches most closely — will drop on Friday morning.
Between these three things, there will be plenty to keep an eye on this week.
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The Setup — American Tower
Investors in the real estate sector (REITs) may know American Tower, but for other investors, it can often fly under the radar.
However, this company sports a market cap of $100 billion and pays out a 3.1% dividend yield. And now, its stock is trying to break out.
AMT is above its 50-day and 200-day moving averages, and now it’s clearing downtrend resistance (the blue line).
If it can stay above these measures, the stock may be able to gain more bullish momentum. Remember, a few months ago this stock briefly cleared the $230 level. As for the downside, bulls will want to see AMT stay above the $208 to $210 zone. Below this area could usher in more bearish momentum in the short term.
Another consideration? REITs tend to struggle when interest rates or Treasury yields are on the rise. On the flip side, falling yields could be a tailwind for stocks like AMT.
Options
Options could be an alternative for investors who want exposure to AMT, but are nervous to get long the stock. Remember the risk for options buyers is tied to the premium paid for the option — and losing the premium is the full risk.
Bulls can utilize calls or call spreads to speculate on further upside, while bears can use puts or put spreads to speculate on the gains fizzling out and AMT rolling over.
For those looking to learn more about options, consider visiting the eToro Academy.
What Wall Street Is Watching
TSLA
Tesla launched its long-awaited driverless taxi service on Sunday, offering rides to a limited group of users. It’s a start to what CEO Elon Musk and long-time Tesla investors hope is a game-changing evolution for the industry and the firm. Check out the chart for TSLA.
SMCI
Super Micro Computer is in focus this morning as investors react to its proposed $2 billion convertible notes offering, prompting discussions around dilution and its growth strategy. Some are voicing concerns about possible short-term effects, while others see the move as a strategic step to drive long-term expansion in the competitive AI infrastructure space.
Oil
In response to the tensions in the Middle East, oil spiked higher in initial trading, although prices have retreated from the highs. Investors will be keeping a close eye on oil this week, as well as the USO ETF. USO is roughly flat this morning as it contends with the key resistance area we discussed last week.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.
