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Market Cap £67.76bn
Enterprise Value £68.05bn
Revenue £11.81bn
Position in Universe 146th / 7320

LIVE MARKETS-Chip stocks surge after strong results from TSMC

Thu 14th October, 2021 6:14pm
* Major U.S. indexes up ~1.5%; S&P Banks index green * All major S&P sectors positive; materials up most * Dollar ~flat; bitcoin slips; gold, crude rise * U.S. 10-Year Treasury yield ~1.52% Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com CHIP STOCKS SURGE AFTER STRONG RESULTS FROM TSMC (1305 EDT/1705 GMT) Chip stocks are rallying on Thursday, lifted by a strong quarterly report from TSMC, which said tight global supplies will continue into 2022. U.S. shares of Taiwan's TSMC are gaining 2.6% after the leading contract chip manufacturer's September quarter net profit beat analysts' expectations. Capital equipment makers ASML Holding ASML.AS , Applied Materials AMAT.O , Lam Research LRCX.O and KLA KLAC.O are rallying between 2% and 4% after TSMC said it would build a new factory in Japan. urn:newsml:reuters.com:*:nL1N2RA0A4 The Philadelphia Semiconductor Index .SOX is jumping nearly 3%, putting it on track to close at its highest level since Sept. 28. Upcoming quarterly reports from U.S. chipmakers, with Intel INTC.O up to bat on Oct. 21, will give investors a glimpse of how long the global chip shortage is likely to last, and how a broader supply chain crisis is affecting their businesses. Nvidia NVDA.O , the most valuable U.S. chipmaker, is jumping more than 3%, supporting the SOX more than any other stock. Rival Advanced Micro Devices AMD.O , is up nearly 3%, bringing its gain in October to around 9%. Advanced Micro's results on Oct. 26 will show whether it has continued to take market share from larger Intel, which has been struggling with its newest manufacturing technology. Micron Technology MU.O is adding around 2%, but it remains down almost 2% since the start of Tuesday, when TrendForce said in a report https://www.trendforce.com/presscenter/news/20211012-10965.html that the DRAM memory chip market next year will likely switch from shortage to surplus. Microchip Technology MCHP.O is rising around 2% to $71.80 after Stifel initiated coverage of the company with a "hold rating and a price target of $76. (Noel Randewich) ***** STOXX EYES BEST WEEK IN SEVEN MONTHS (1228 EDT/1628 GMT) It looks like investors are finally buying following the September dip and after another strong close on Thursday, up 1.2%, the STOXX 600 .STOXX is now set for its best week since March as the earning season gets underway. The pan-European equity benchmark .STOXX has risen 1.9% since Friday's close and month-to-date it is up 2.4%. In September it fell 3.4%, marking its first negative month since October 2020. (Danilo Masoni) ***** EVEN IF POWELL A LAME DUCK, MONETARY POLICY WILL WADDLE ON (1200 EDT/1600 GMT) In its latest FOMC Minutes released on Wednesday, the Federal Reserve discussed a plan for a "gradual" cut in bond-buying, saying that tapering could start in mid-November or mid-December. urn:newsml:reuters.com:*:nL1N2R91NQ Mike O'Rourke, Chief Market Strategist at JonesTrading, takes a look at those minutes, and what it may mean for monetary policy and Fed Chair Jerome Powell's future. O'Rourke says the latest minutes lay the foundation for President Biden to announce plans to nominate a new Fed Chair to replace Powell, whose term ends in February. Investors believe it is important that the policy adjustment process commences before a new Chair is nominated in order to prevent potential confusion created by Powell's lame duck status, O'Rourke writes. O'Rourke's expectation that Powell will be replaced appears to be a minority view. Political betting website PredictIt https://www.predictit.org/markets/detail/7398/Whom-will-the-Senate-next-confirm-as-Chair-of-the-Federal-Reserve shows about a 76% likelihood that Powell will stay on at the Fed for another term. Meanwhile, O'Rourke says the FOMC was clear in stating that the price stability component of “substantial further progress” has been met, and that in terms of the employment component, it would appear that "we are as close as one can get to the finish line without having stepped over it." O'Rourke is struck by the detailed path laid out in the minutes, saying, "It seems bizarre that a decision on tapering has not been made yet, but we have been told when it will start, when it will end and the monthly amount of tapering. This clearly indicates Powell's expected monetary policy path over the next 8 months (even if he only remains Chairman for 4 ½ months)." O'Rourke adds "Now, when President Biden nominates a replacement, there won't be any confusion about the path of monetary policy." (Terence Gabriel) ***** THE SUPPLY CHAIN FOLLIES: JOBLESS CLAIMS, PPI (1049 EDT/1449 GMT) Thursday's data followed the Fed's "taper tap-dance" routine with an up-tempo duet about unemployment and inflation. The number of U.S. workers filing first-time applications for unemployment insurance USJOB=ECI fell last week to 293,000 beating consensus and dipping below the 300,000 mark for the first time since the onset of the pandemic in March 2020. urn:newsml:reuters.com:*:nL1N2R92XV Any impulse to pop the champagne cork should be tempered with a reminder that this decrease occurred amid an ongoing worker shortage, which likely has employers thinking twice before handing out pink slips. That labor drought - evident in Friday's dismal September employment report - is adding to woes from the supply chain logjam, and is a major impediment to a full economic recovery from the shortest and steepest downturn ever. It's also causing wage growth to accelerate as business owners sweeten the pot to attract and retain workers, adding more spice to the inflation stew, which continues to gather heat. Still, weekly claims are edging closer to the upper limits of the range associated with healthy labor market churn and suggest that the "economic recovery remained largely on track," the condition set by the Fed before it can begin tightening its COVID era monetary policy. "The data support the narrative that businesses are increasingly reluctant to let go of workers amid a severe supply shortage," writes Rubeela Farooqi, chief U.S. economist at High Frequency Economics, who adds that "claims are likely to continue to decline over coming weeks." Ongoing claims USJOBN=ECI , reported on a one-week lag, also came in below expectations at 2.593 million. Still, that's high. For context, more Americans have been collecting unemployment for two weeks or more than live in Houston. The Labor Department also delivered some inflation news in the form of its Producer Prices (PPI) report for September USPPFY=ECI . PPI, or the prices U.S. companies get for their goods at the warehouse door, rose 0.5% in September, marking 0.2 percentage point deceleration from the previous month and coming in a hair below the 0.6% projected by economists. "Worsening supply-chain dynamics and the recent acceleration in commodities prices will keep price pressures elevated well into next year," says Mahir Rasheed, U.S. economist at Oxford Economics. "But the latest data confirms our view that PPI inflation will moderate from about 10% y/y in Q4 to 7.2% in Q1 and 4.6% in Q2 2022." So-called "core" PPI USPPTY=ECI , which excludes food, energy, and trade services, decelerated on a monthly basis but posted a year-over-year print of 5.9%. Notably, headline PPI notched a record high year-over-year jump of 8.6%, running hotter than the previous month's 8.3% annual growth but a tad cooler than analyst expectations. The graphic below shows core PPI, along with other major indicators, all of which continue to sail well above the Fed's average annual 2% inflation target and appear to be confirming worries that "transitory" price growth could stretch the definition of the word: Wall Street is in a jovial mood in morning trading, with the S&P 500 on the verge of delivering its best daily performance since July. All three major U.S. stock indexes are bright green, with materials .SPLRCM and tech .SPLRCT leading the parade. (Stephen Culp) ***** U.S STOCKS HIGHER OUT OF The GATE (0952 EDT/1352 GMT) Wall Street's main indexes opened higher on Thursday after big banks reported better-than-expected quarterly results, helping investors to look away from inflation concerns. .N That said, shortly after the open, the S&P 500 .SPX , Dow .DJI and Nasdaq Composite .IXIC are all gaining around 1% or more, although the S&P Banks index .SPXBK is slightly red. Of note, the SPX and IXIC ended three-day losing streaks on Wednesday, while the Dow fell for a fourth-straight day. All major S&P 500 sectors are higher early Thursday with tech .SPLRCT and healthcare .SPXHC the leading gainers. Financials .SPSY , however, are lagging to the upside. Indeed, with the U.S. 10-Year Treasury yield US10YT=RR on track to fall for a third-straight day, growth .IGX is outperforming value .IVX . Here is where markets stand early in the session: (Terence Gabriel) **** NASDAQ COMPOSITE: TAKE A WALK ON THE WILD SIDE (0855 EDT/1255 GMT) With the fourth quarter of 2021 just underway, the Nasdaq Composite .IXIC is on track to do something it has never done before: its entire trading range so far this year has been above its upper yearly Bollinger Band (BB): Bollinger Bands (BB) are envelopes, or trading bands, plotted at a level of standard deviation above and below a simple moving average of price. Given that the bands are based on standard deviation, they adjust to swings in volatility. The bands can help answer the question of whether price is high or low on a relative basis. urn:newsml:reuters.com:*:nL1N2JH19X Using Refinitiv data, the IXIC has ended a year above its upper yearly BB - or more than two standard deviations above its 20-year moving average - nine times, or about 41% of the time. This includes a current eight-year streak from 2013 to 2020. What has been unique about this year, however, is that the Composite's 12,397.05 low is above is upper yearly BB, which now resides at 11,918.34. When looking at the greater histories of the Dow .DJI , and S&P 500 .SPX , these index's entire yearly ranges have only been above their upper yearly BB once (~1% of the time), and twice (~3% of the time), making it a relatively rare event. The Composite may yet accomplish this feat in 2021, but given that the bands adjust to volatility, we can calculate the minimum upside level at which the IXIC would need to end the year in order to pull the upper yearly band above the current low. That level is anything above 16,003. Action on the downside is trickier, given that we can't know its exact path. For example, a deep decline, followed by a big upward reversal could solve the issue. One thing we can know under a downside scenario, however, is that at some point before year-end, the IXIC would, at a minimum, need to break below the year's current low at 12,397.053. Therefore, based on this analysis, in order to not register the "rare" event, the IXIC must now either end the year at least 10% higher than Wednesday's close, or, at some point, it has to fall more than 15% from yesterday's finish. Thus, there appears to be potential for one wild ride through the rest of 2021. urn:newsml:reuters.com:*:nL1N2R918N (Terence Gabriel) ***** FOR THURSDAY'S LIVE MARKETS' POSTS PRIOR TO 0855 EDT/1255 GMT - CLICK HERE: urn:newsml:reuters.com:*:nL8N2RA3ML <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ IXICBB10142021B https://tmsnrt.rs/3DwZ6Cm earlytrade10142021 https://tmsnrt.rs/3aDcE2K Jobless claims https://tmsnrt.rs/3mQsGMh Inflation https://tmsnrt.rs/3lDMWRU STOXX eyes best week since March https://tmsnrt.rs/3aDVIJu ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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