Shares Plunged 29% on Monday

Key Takeaways

• U.S.-traded shares of Temu parent PDD Holdings plunged 29% on Monday after the China-based online retailer posted revenue that came in below expectations amid intensifying competition.
• Investors fret that profitability may slow as the company increases investments to scale its business.
• PDD shares broke down from a rising wedge on above-average trading volume, indicating selling participation by institutional investors.
• Investors may look for buying opportunities at key support levels including $99, $74, $54, and $45.

U.S.-traded shares in Temu parent PDD Holdings (PDD) plunged 29% on Monday after the China-based online retailer posted revenue that came in below expectations amid intensifying competition.

The company, whose American depositary receipts have still gained about 25% over the past year despite Monday’s drop, has grown rapidly to challenge e-commerce giant Amazon (AMZN), and Chinese rivals Alibaba (BABA) and JD.com (JD). However, investors now fret that profitability may slow as the company increases investments to scale its business.

Below, we zoom out by taking a look at PDD’s weekly chart and use technical analysis to identify important price levels where investors may look for buying opportunities.

Breakdown From Rising Wedge

Since bottoming out in March 2022, PDD shares trended higher within a rising wedge before Monday’s significant breakdown below the pattern’s lower trendline. Importantly, the move occurred on above-average trading volume, indicating active participation by institutional investors.

Amid the stock’s plunge, investors should monitor four key areas on the chart where bargain hunters may look for lower entry points.

Monitor These Key Support Areas

The first sits around $99 in close vicinity to the 200-week moving average, an area where the shares could encounter support near a horizontal line that connects a series of comparable trading levels from July 2020 to October last year. It’s worth noting that the stock fell below this closely watched technical level in Monday’s trading session before reclaiming it by the closing bell.

An inability to hold this level could see the shares fall to $74, a location on the chart where they may attract buying interest near a trendline that links multiple peaks and troughs between October 2020 and July last year.

Further bearish price action could drive a sell-off down to the $54 area, where the shares would likely garner support near the lower portion of a consolidation period that formed on the chart between December 2021 and February 2022 toward the end of a multi-month down trending move.

Finally, a more significant decline could see the stock revisit lower support around $45, where buyers may seek entries near the prominent November 2019 swing high, which also roughly aligns with the April 2022 countertrend peak and August 2022 swing low.

PDD shares were down 0.8% at $99.22 in premarket trading Tuesday about two hours before the opening bell.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

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Key Takeaways

• Semiconductor stocks moved lower in advance of the latest financial results from artificial intelligence chipmaker Nvidia, due for release after markets close Wednesday.
• Rising expectations could make it more difficult for the company to impress investors.
• Given Nvidia’s outsized influence, a big move in its stock price could have a significant impact on markets.

Semiconductor stocks lost ground Monday, ahead of the latest financial results from artificial intelligence (AI) darling Nvidia (NVDA), due for release after the markets close Wednesday.

Nvidia shares finished 2.3% lower Monday, giving back some of the stock’s gains Friday amid rising expectations for the company’s results. Other chip stocks also lost ground, with the PHLX Semiconductor Sector Index (SOX) falling 2.5% Monday.

Nvidia’s Earnings Could Affect the Broader Market

Nvidia has been a key contributor to the record-setting run for U.S. stocks in 2024, with high expectations for the company’s AI-fueled growth underpinning massive gains. In June, Nvidia briefly surpassed Microsoft (MSFT) as the world’s most valuable company by market capitalization.

Given the chipmaker’s outsized influence in major indexes, a big move in its stock price would affect the broader market.

Analysts have high expectations for Nvidia’s upcoming report, projecting second-quarter revenue and earnings will more than double from the year-ago period. Their forecasts have also climbed in the last few days, which could make it more difficult for the company to impress investors.

Micron and AMD Slip Along With Nvidia Monday

Shares of Nvidia partner Micron Technology (MU) sank Monday as well, falling nearly 4% as Needham reportedly trimmed its price target on the stock to $140 from $150. Analysts cited a flat outlook for shipments of Micron’s DRAM and NAND products.

Other chip stocks that slipped Monday included Lam Research (LRCX) and Advanced Micro Devices (AMD), which lost 3.4% and 3.2%, respectively.

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KEY TAKEAWAYS

• IBM reportedly is closing its China research and development (R&D) department and moving those functions overseas.
• The Wall Street Journal said IBM executive Jack Hergenrother informed employees of the move in a virtual meeting Monday. 
• In a statement to Investopedia, an IBM spokesperson said, “IBM adapts its operations as needed to best serve our clients.”

IBM (IBM) reportedly is closing its China research and development (R&D) department and moving those functions overseas.

The Wall Street Journal said IBM executive Jack Hergenrother informed employees of the move in a virtual meeting Monday. 

In a statement to Investopedia, an IBM spokesperson said, “IBM adapts its operations as needed to best serve our clients, and these changes will not impact our ability to support clients across Greater China region.”

Beijing Pushing Chinese Firms To Buy Homegrown Tech

The closure comes amid Beijing’s push to get domestic purchasers to buy more from homegrown technology suppliers and as American firms face tighter scrutiny on their China operations by U.S. lawmakers in strategic areas like artificial intelligence (AI).

IBM’s closure would affect more than 1,000 people and mark the latest retreat from China by a top U.S. firm. In May, the Journal reported that Microsoft (MSFT) asked local employees to consider transferring outside the country.

IBM shares edged higher to $196.74 as of 10 a.m. ET Monday. They are up 20% this year.

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Stock Has Gained 35% From Its August Low

Key Takeaways

• CrowdStrike shares are in the spotlight this week as the cybersecurity company prepares to release quarterly results Wednesday, its first earnings report after an erroneous software update it carried out caused a global IT outage
• A bullish piercing pattern on the weekly chart has helped shift momentum leading into the company’s quarterly financial results.
• Investors should watch key lower price levels at $235 and $201, while monitoring important overhead price levels at $285 and $330.
• A bars pattern, which takes the stock’s strong pandemic trending move from March 2020 to February 2021 and positions it from this month’s low, forecasts a longer-term price target around $1,205.

CrowdStrike shares (CRWD) are in the spotlight this week, with the cybersecurity giant set to disclose its fiscal 2025 second-quarter results after the closing bell on Wednesday. Investors will have particular interest in the report, given it’s the first opportunity to assess the financial impact of an erroneous software update carried out by the company that caused a global IT outage last month.

Despite the stock selling off sharply after the incident, it has recovered 35% from its recent August low amid growing consensus among analysts that the impact of the outage may be limited and already priced into the shares.

Below, we look over the technicals on CrowdStrike’s weekly chart and point out crucial price levels to watch as the cybersecurity giant prepares to release its quarterly report.

Bullish Piercing Pattern Shifts Momentum

Since undergoing a strong intraday reversal from the 200-week moving average (MA) to complete a piercing pattern earlier this month, CrowdStrike shares have continued to gain ground. Importantly, the bullish two-bar candlestick formation has helped shift momentum leading into the company’s earnings report.

Looking ahead, investors should monitor several important price levels likely to attract interest amid CrowdStrike’s looming earnings report.

Lower Price Levels in Focus

A pullback from current levels could see the shares initially fall to the $235 area, a location where the price may find support from the prominent April countertrend high that formed towards the start of the stock’s down-trending move from October 2021 to January last year.

Ongoing selling may lead to a retest of this month’s low around $201, a region that has previously found a confluence of support from August 2022 peak and the upward sloping 200-week MA.

Overhead Price Levels in Play

Further upside could see the shares climb to $285, an area on the chart just above the 50-week MA where investors may look to place sell orders near a trendline linking two peaks in August and October 2021 with the April 2024 swing low.

A convincing move above this level could fuel a move up to $330, where the shares may encounter overhead resistance near a period of narrow consolidation that formed on the chart between early February and late March this year.

Longer-Term Price Target

We can project a longer-term price target by using a bars pattern. We do this by taking the stock’s strong pandemic trending move from March 2020 to February 2021 and position it from this month’s low, which forecasts a target of around $1,205. We selected this trending move as it followed a steep five week correction of around 50%,similar in size to CrowdStrike’s recent five-week drop.

CrowdStrike shares were up 0.3% at $272.43 about two hours before Monday’s opening bell.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

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Shares Have Risen 43% From Early-August Low

Key Takeaways

• Nvidia shares are in focus this week as the AI favorite prepares to release its highly anticipated quarterly earnings report on Wednesday. Investors will be looking out for sustained growth in the chipmaker’s data center segment and updates about its next-generation Blackwell chips.
• The AI darling’s shares, which have surged 43% from their August low, have been bolstered in recent weeks by bullish Wall Street coverage and growing earnings forecasts.
• The share price has recently consolidated within a rectangle formation, indicating a continuation of the chipmaker’s move higher. 
• Nvidia shares may encounter support around $116 and $97, but face resistance near $136 and $170.

Nvidia (NVDA) shares are in focus this week as the artificial intelligence (AI) favorite prepares to release its highly anticipated earnings report for its fiscal 2025 second quarter on Wednesday. Investors will be looking out for sustained growth in the chipmaker’s data center segment and updates about its next-generation Blackwell chips following reported delays.

The AI darling’s shares, which have surged around 43% from their August low, have been bolstered in recent weeks by bullish Wall Street coverage and growing earnings forecasts. The company, which has blown past expectations for both revenue and earnings in recent quarters, is under pressure to deliver another blockbuster quarterly report.

Below, we’ll take a closer look at Nvidia’s chart and use technical analysis to identify important price levels to watch out for amid the AI behemoth’s looming quarterly results.

Rectangle Formation Indicates Upside Continuation

Since staging an intraday reversal in early August to mark the end of a 26% correction from their record closing high, Nvidia shares have recovered the lion’s share of those losses. The price recently consolidated within a rectangle formation, indicating a continuation of the chipmaker’s move higher. 

However, it’s worth noting that trading volumes remain below longer-term averages during the stock’s resurgence, pointing to possible apprehension by institutional investors ahead of the company’s quarterly results.

The stock gained 4.6% on Friday to close at $129.37.

Amid the potential for earnings-driven volatility in Nvidia shares this week, investors should eye these key support and resistance levels.

Support Levels to Watch

A breakdown below the rectangle pattern could see the shares initially test the $116 level, an area on the chart in close vicinity to the 50-day moving average where buyers could look for entry points near a horizontal trendline connecting a series of similar trading levels between May and July.

A deeper post-earnings retracement could spark a fall to $97, where the shares would likely attract significant support from two prominent price peaks that formed on the chart during March. This region also sits just a little above the stock’s correction low recorded during the early August broad-based market sell-off.

Resistance Areas to Monitor

Upon an upside breakout of the rectangle formation, the shares may encounter resistance around $136, where they could find investors willing to lock in profits near the June 18 record close, a level that also aligns with the stock’s July peak.

To forecast a potential resistance area above Nvidia’s all-time high (ATH), we can use the measuring principle. To do this, we calculate the distance of the trending move that preceded the rectangle and add that amount to the formation’s breakout point. In this case, we add $39 to $131, which projects a target of $170, a location where the shares may run into selling pressure.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

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Key Takeaways

• Wall Street in recent weeks has stopped cheering “bad” economic data, as a weakening labor market and cooling inflation have changed the narrative that took hold during America’s post-Covid boom.
• The Fed, after years of focusing on taming inflation, has begun to emphasize rising risks to maximum employment, the second component of its dual mandate.
• The shift comes as markets prepare for the Federal Reserve to start lowering interest rates for the first time in more than four years next month.

Starting in 2022, around the time the Federal Reserve began raising interest rates to combat surging inflation, a new paradigm took hold on Wall Street: “Bad data” was good news. 

The U.S. economy was growing at an annual rate of nearly 7% at the end of 2021, its fastest pace in two decades—excluding the Covid-induced 33% jump in Q3 2020. U.S. consumers, the engine of the U.S. economy, were spending hand over fist as they came out of Covid lockdowns flush with savings. 

But the economic boom was a double-edged sword. From January to December 2021, the annual inflation rate climbed from 1.4% to 7%. It would continue to rise before peaking in June 2022 at 9.1%, its highest since the 1980s.

The Federal Reserve homed in on inflation and, in March 2022, began its most aggressive campaign of interest rate hikes in decades as it sought to keep the U.S. economy from boiling over.

The Fed’s focus could be singular, despite a Congressional mandate to manage both inflation and unemployment, because of a historically tight labor market.

Hiring ground to a halt in March 2020 as Covid-19 shuttered businesses and closed offices across the country. But as the economy recovered and rock bottom interest rates stimulated growth, companies went on a hiring spree. Employers added an average of 603,000 jobs a month in 2021, reducing the unemployment rate from 6.4% in January to 3.9% in December. And yet in March 2022, there were still more than 12 million job openings in the U.S., nearly double the pre-pandemic level.

The labor market remained abnormally tight throughout 2022 and 2023, keeping wage growth well above the pre-pandemic average and subsequently supporting consumer spending and growth.

And so for a while, evidence of a weakening job market and slowing economy was good news for the Fed and markets, because inflation was the Fed’s biggest risk.

Inflation is No Longer the Main Concern

That has all changed in recent weeks. 

Stocks had their worst day since 2022 in early August after July’s jobs report showed a surprising jump in the unemployment rate, raising fears that the labor market had not just softened but deteriorated and that the economy was on track to slip into recession. Just days later, initial jobless claims came in lower than forecast and stocks had their best day since 2022. 

Inflation has taken a back seat to other economic data points. The S&P 500 earlier this month had its biggest reaction to growth data since 2020, according to a recent report from Bank of America Securities. Meanwhile, the index’s response to inflation data was its most muted since January. 

“Growth,” BofA analysts concluded, “is in the driver’s seat.”

And strong growth has stopped scaring markets, as reflected in the below visualization by LPL Financial strategists Adam Turnquist and George Smith, who charted the correlation between the S&P 500 and the Bloomberg U.S. Economic Surprise Index. A positive correlation, they note, implies that good economic news is good news on Wall Street, while a negative correlation implies the opposite. 

The two have oscillated between negative and positive correlation over the last year, though they have spent more time negatively correlated. The negative correlation at its most severe has also been greater than the positive correlation at its most severe. 

The correlation turned positive in early August in what could be a sign, Turnquist and Smith write, that “investors may no longer be giving the economy the benefit of the doubt.” 

Fed Increasingly Focused on Labor Market

The Fed also has stopped giving the economy the benefit of the doubt. “The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks,” the Federal Open Market Committee’s June policy statement read. In July, that sentence became: “The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.” 

The minutes of the Fed’s July meeting, released on Wednesday, indicated officials were increasingly concerned with the state of the labor market. According to those minutes, “Participants saw risks to achieving the inflation and employment objectives as continuing to move into better balance, with a couple noting that they viewed these risks as more or less balanced.” 

On Friday, in an eagerly anticipated speech at the Fed’s annual Jackson Hole Economic Policy Symposium, Fed Chair Jerome Powell said, “The upside risks to inflation have diminished. And the downside risks to employment have increased.” As a result, “The time has come for policy to adjust,” Powell said, noting that pace of monetary easing would depend on incoming data.

Markets on Edge Ahead of September Rate Cut

Wall Street has been eagerly awaiting interest rate cuts for most of this year. But now that those cuts finally appear imminent, they may also feel ominous. 

“Does the market really want the Fed to cut interest rates because they’re worried about the labor market?” asked Quincy Krosby, Chief Global Strategist at LPL Financial. To a certain extent, yes, “because what the market doesn’t want is the Fed to neglect that—just see deterioration in the labor market and do nothing about it.” 

“But,” she added, “it also then suggests that the economy is slowing at a faster pace” than the market thought. 

What markets really want, BofA analysts argue, is reassurance that the central bank won’t sacrifice economic expansion to tame inflation. “Equities just need a nod that growth is going to be supported by the Fed,” they wrote. 

Whether the Fed accommodates will depend, in Chair Powell’s words, on “the totality of the data.” And there’s a lot of data—two separate inflation reports and the August jobs report—between now and the Fed’s next meeting on September 18.

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Key Takeaways

• Roku shares rallied Friday after Guggenheim analyst Michael Morris reportedly upgraded Roku stock to “buy” from “neutral.”
• Guggenheim’s $75 price target for the stock represents a roughly 8% premium from its closing price Friday.
• Morris said Roku’s efforts to monetize its video advertising inventory are beginning to pay off.

Roku (ROKU) shares popped Friday after Guggenheim analysts reportedly upgraded the stock to “buy” from “neutral.”

The streaming technology company’s stock rallied nearly 12% following the report, with Guggenheim’s price target of $75 representing a nearly 8% premium to Friday’s closing price of $69.14.

Guggenheim Says Roku Has Improved Monetization Efforts

Guggenheim analyst Michael Morris said Roku has improved its monetization efforts, which shifted his outlook on the company. 

“We have had concerns about the strategy to drive incremental monetization,” Morris said in an interview with CNBC. “About two years ago, they started reinvigorating the leadership team… Now, I think we are really at the start of seeing the fruits of that labor, specifically broadening their ability to monetize their video advertising inventory.”

Morris also pointed to the potential for Roku to better monetize its home screen, with the company ending the second quarter with nearly 84 million streaming households.

Despite Friday’s rally, Roku stock has yet to fully recover from the losses it endured following the release of its fourth-quarter results in February, when the company reported a drop in average user spending and warned of “near-term challenges in the macro environment.” The stock has lost nearly one-quarter of its value since the start of the year.

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Key Takeaways

• Nvidia reports second-quarter earnings for fiscal 2025 after the bell on Wednesday, Aug. 28.
• Analysts expect revenue and earnings to more than double from the year-ago period.
• Investors will likely be watching for sustained data center segment growth.
• The chipmaker could also comment on reports that its Blackwell chip is delayed.

Nvidia (NVDA) will report second-quarter results for fiscal 2025 after the bell on Wednesday, Aug. 28, with investors likely watching for sustained data center growth and any updates on reported delays affecting the new Blackwell artificial intelligence (AI) chip.

Analysts project revenue will grow to $28.84 billion, according to estimates compiled by Visible Alpha, which would be more than double Nvidia’s revenue in the same period a year ago. Net income is also expected to more than double from a year earlier to $14.95 billion, with a sharp decline in earnings per share (EPS) expected primarily as a result of the company’s 10-for-1 stock split.

Key Metrics: Data Center Growth

Nvidia’s data center segment has grown rapidly amid rising demand for its advanced computing tech to support AI.

Data center revenue reached a record high of $22.6 billion in the first quarter of fiscal 2025, surpassing its previous record set the quarter prior.

Analysts expect revenue for the data center business to be $25.19 billion for the fiscal second quarter, which would set a new record high with sales more than doubling from the year-ago period.

Business Spotlight: Reported Blackwell Delay

Reported delays in Nvidia’s Blackwell chip sent the chipmaker’s stock tumbling earlier this month, though Nvidia has indicated production is still on track to ramp in the second half of the year, as planned.

Some analysts have suggested investors’ worries may be overblown, with little impact to customers.

Raymond James analysts, who said the delay could have a “modest” impact and support increased demand for earlier chips, expect “management to downplay the speculated delays.”

Nvidia shares have more than doubled in value since the start of the year, at $127.36 as of 12:30 p.m. ET Friday.

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KEY TAKEAWAYS

• Skydance Media reportedly is demanding that Paramount Global stop acquisition talks with media executive Edgar Bronfman Jr. 
• According to The Wall Street Journal, Skydance’s lawyers said Paramount’s special committee breached the terms of its deal for Shari Redstone’s media empire by extending the “go-shop” deadline to Sept. 5.
• Paramount on Wednesday extended the deadline after receiving Bronfman’s reported $6 billion offer for Redstone’s National Amusements and a minority stake in the entertainment giant. 

The saga for control of Paramount Global (PARA) continues, with Skydance Media reportedly demanding that the entertainment giant stop negotiating with Edgar Bronfman Jr.

Skydance, in a letter from its lawyers, said Paramount’s special committee breached the terms of its takeover agreement for Shari Redstone’s media empire by extending the “go-shop” deadline to Sept. 5, according to The Wall Street Journal.

Paramount on Wednesday extended the deadline to assess bids rivaling Skydance’s after receiving Bronfman’s reported $6 billion offer for Redstone’s National Amusements and a minority stake in the entertainment giant.

Skydance Says Bronfman’s Bid Isn’t Superior

Skydance said Bronfman’s bid for control of Paramount isn’t superior and therefore the deadline shouldn’t have been extended, the Journal reported. 

David Ellison’s company had agreed to a deal with Redstone worth more than $8 billion that involved buying National Amusements and merging Skydance with Paramount, the Journal reported last month.

Bronfman’s offer is the latest in a series of bids for control of Paramount in recent months. The entertainment firm, which owns CBS, MTV, and its eponymous movie studio, has been struggling as the rise of streamers like Netflix (NFLX) disrupt traditional networks.

Paramount shares are slipping 1.6% about 45 minutes before the opening bell Friday. They have lost about a quarter of their value year-to-date.

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Shares Rose 11% in Extended Trading Thursday

Key Takeaways

• Workday shares soared 11% in extended trading Thursday after the human resources and capital management software provider reported quarterly results that topped estimates and pointed to growth opportunities in international markets.
• The shares have carved out a double bottom between June and August, a well-known chart pattern that indicates an upside reversal after an extended downtrend.
• Investors should monitor important overhead price levels in Workday shares at $264, $279, and $306.

Workday (WDAY) shares soared 11% in extended trading Thursday after the human resources and capital management software provider reported quarterly results that topped estimates and pointed to growth opportunities in international markets.

The company’s stock, which is down around 25% from its record close through Thursday’s trading session, has come under investor scrutiny this year over concerns that enterprise customers have trimmed spending on premium software subscription services amid macroeconomic uncertainty.

Below, we’ll take a closer look at Workday’s chart and use technical analysis to identify key price levels to watch out for after the company’s upbeat report.

Double Bottom Breakout

Workday shares have carved out a double bottom between June and August, a well-known chart pattern that indicates an upside reversal after an extended downtrend.

Moreover, as the formation’s second bottom made a lower low, the relative strength index (RSI) indicator formed a comparatively shallower low to create a bullish divergence, a technical signal suggesting easing selling momentum. 

More recently, the stock’s price has reclaimed the 50-day moving average and sits positioned to breakout above the double bottom’s neckline on Friday.

The stock gained 11% to $256.65 in after-hours trading Thursday.

Monitor These Price Levels Amid Post-Earnings Strength

Following Workday’s expected post-earnings pop, investors should focus on three key price levels.

The first sits near $264, an area on the chart that could encounter overhead resistance from a trendline connecting three troughs that formed between December and March with a late May countertrend peak.

Further upside may see the shares climb to the $279 region, where they could run into selling pressure near a horizontal line linking a range of comparable trading levels from December to March, one of which includes the opening price of a prominent stock gap in early March.

Finally, a more significant move higher could drive a rally up to $306, a location likely to attract attention around the stock’s late February record close.

It’s also worth pointing out that this area roughly aligns with a bars pattern price target when taking the up-trending move from September to February and positioning it from the double bottom’s low. Interestingly, that prior move started following a gap lower, similar to the stock’s recent advance, which commenced after the Aug. 5 broad market sell-off.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

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