Source: Wall Street See
Except for small cap stocks, most stock indices wiped out their gains for the day; international oil prices hit a one-month low; interest rate bets favored US Treasury auctions; Chinese concept stocks fell 1.8%; offshore renminbi rebounded. Financial reports are the focus today, with Google and Tesla releasing their second-quarter reports; Google Cloud quarterly revenue surpassed 10 billion US dollars for the first time, rising 3% during after-hours trading and then falling 2% at present; Tesla's low EPS profit caused a drop of more than 8% after-hours. Disappointing earnings resulted in United Parcel Service, the shipping leader, plunging 12%, marking the biggest drop in history. It also caused LVMH, the luxury goods giant, to fall more than 5% at one point in its US stock.
The continuing downturn of the US economy is highlighted by record demand for the auction of two-year US Treasury bonds, demonstrating that the market firmly believes that the Fed will begin lowering interest rates this year.
The total sales of existing homes in the US fell by 5.4% on a month-on-month and year-on-year basis in June. The sales velocity fell to a new low for the year, while house prices continued to hit new highs. The inventory of unsold homes rose to its highest level since May 2020. The service industry activity of the Philadelphia Fed fell sharply to a more than one-year low in July. The Richmond Fed's manufacturing index also fell more than expected to -17, expected -6, previous -10 in July.
Investors are focused on the earnings reports of major technology stocks such as Tesla and Google's parent company, which are beginning their second quarter earnings season.
Due to discounts on cars and investment in AI affecting profitability, Tesla's Q2 profits fell by double digits, exceeding expectations, and the release of Robotaxi, their autonomous taxi, has been delayed from August to October, resulting in an 8% drop after the market closed. Google's Q2 revenue and profit increased more than expected, with quarterly cloud revenues surpassing $10 billion for the first time, but advertising slowed down, and capital expenditure on AI investment exceeded that of the first quarter, leading to fluctuations and decline after market. Nvidia fell 0.8% after hours, and the Nasdaq 100 fell about 0.35% after hours.
Despite relatively poor earnings results, the US stock market's earnings season has started strong. According to FactSet data, about 20% of companies in the S&P 500 index have disclosed their second quarter results, and 80% of those companies' earnings have exceeded Wall Street's expectations.
Apart from small-cap stocks rising by 1%, all major US stock indexes fell slightly, with Tesla and Nvidia falling and chip stocks generally dropping.
On Tuesday, July 23, small cap stocks rose more than 1% and led the way, while the other major stock indices rose and then fell, accelerating the plunge in the closing session.
The NASDAQ and NASDAQ 100, dominated by technology stocks, hit the daily highs early in the morning and rose by about 0.67% and 0.4%, respectively. However, they fell to their intraday lows of 0.22% and 0.44% at the end of the session. The S&P 500 rose nearly 0.38% in early trading and then fell more than 0.24% to its daily low at the end of the session. The Dow Jones, which gathers blue chip stocks, refreshed its daily highs at the midday trading session and rose nearly 0.28%. It then refreshed its daily lows and fell nearly 0.24% at the end of the session. The Russell 2000 small cap stocks rose all the way, and rose nearly 1.5% at the end of the session.
As of the close, all major stock indices except small-cap stocks fell across the board:
The S&P 500 index fell by 8.67 points, or 0.16%, to close at 5555.74. The Dow Jones fell by 57.35 points, or 0.14%, to close at 40358.09. The NASDAQ fell by 10.22 points, or 0.06%, to close at 17997.35.
The NASDAQ 100 fell by 0.35%; the Nasdaq Technology Market Cap weighted index (NDXTMC), which measures the performance of Nasdaq 100 technology component stocks, fell by 0.25%; the Russell 2000 index rose by 1.02%; and the fear index VIX fell by 1.34%, closing at 14.71.
Of the 11 sectors in the S&P 500 index, energy fell 1.55%, utilities fell 0.65%, essential consumer goods fell 0.32%, communications services fell 0.22%, industry fell 0.21%, real estate fell 0.17%, information technology/technology fell 0.13%, and medical care, optional consumer goods, and finance remained unchanged. The raw material sector rose 0.38%.
Regarding investment strategies:
Barclays analysts raised their year-end target for the S&P 500 index from 5,300 to 5,600, higher than the market's average expectation of 5,431 because even with recent continuous declines in US technology giants, large-cap technology companies are still attractive due to strong earnings expectations. Although the analyst's valuation assumptions for large-cap technology companies are high, the P/E ratio adjusted for growth is reasonable, and the analyst expects this type of stock to match its valuation.
However, according to analysts from Bank of America, as the S&P 500 index experienced its worst week since April, Bank of America's clients sold a net $7 billion of US stocks last week, the largest outflow since November 2020, with institutional investors and hedge funds leading the outflow and retail investors net buying only small amounts. Financials were the sector with the largest net outflow for the second consecutive week, despite the industry's better-than-expected earnings performance. The technology sector saw a large amount of capital outflow, the first outflow since May. Communications services sector continued to see capital inflows, making it the sector with the largest amount of capital inflows.
The media pointed out that the large rise in the US stock market this year was driven by technology giants, but traders are now preparing for potential declines in stocks such as Nvidia and other large-cap technology stocks as well as the Nasdaq 100 index, as there are concerns that this sector has risen too quickly. According to market data and analysts, traders are buying put options to hedge against the decline of stocks such as Nvidia and other major technology stocks as well as the Nasdaq 100 Index. There is strong demand in the market for such options, to the extent that the premium for a one-month put option to prevent a 10% drop in Nvidia stock price relative to a call option to bet on a 10% increase in stock price has reached its highest level since January. Similarly, the put options premium for the Invesco QQQ Trust ETF (code: QQQ) tracking the Nasdaq 100 index is currently at its highest level since April.
The seven big tech stocks showed mixed performance. Amazon rose 2.11%, Apple rose 0.47%, Microsoft rose 0.43%, 'metaverse' Meta rose 0.26%, while Nvidia fell 0.77%, and Tesla fell more than 2.04% before earnings report. Google A rose 0.07% before earnings report.
After the general increase of chip stocks yesterday, most of them returned to a downward trend. PHLX Semiconductor Index fell 1.46%; Industry ETF SOXX fell 1.49%; Nvidia double long ETF fell 2.06%.
ASML ADR fell 0.9%, Applied Materials fell 1.71%, AMD fell 1.2%, Marvell Technology fell 0.9%, KLA Corp fell 0.23%, Qualcomm fell 0.83%, Micron Technology fell 0.89%, Intel fell 1.26%, while Arm Holdings surged 4.98%, Taiwan Semiconductor US stock rose 0.28%, and Broadcom rose 1.68%.
AI concept stocks rose and fell. BullFrog AI rose 19.7%, "Nvidia concept stock" Serve Robotics rose 7.18%, Oracle rose 2.1%, Snowflake rose 1.11%, Palantir rose 1.23%, CrowdStrike rose 1.88%, BigBear.ai rose 2.67%, while Nvidia concept stock SoundHound fell 0.8%, and Dell fell 1.91%.
China concept stocks fell collectively. Nasdaq Golden Dragon China Index (HXC) fell 1.84%. Among ETFs, China Technology Index ETF (CQQQ) fell 3.39%, and the China Internet ETF (KWEB) fell 1.74%.
Among popular China concept stocks, NIO fell 4.48%, XPeng fell 6.67%, Kanzhun fell 0.8%, Li Auto Inc fell 3.47%, Bilibili fell 3.26%, JD.com fell 2.46%, Tencent Holdings (ADR) fell 2.53%, Alibaba fell 0.7%, Baidu fell 2.06%, NetEase fell 0.14%, and PDD Holdings fell 0.86%.
It is worth mentioning that the regenerative medicine technology company RGC, which uses traditional Chinese medicine (TCM) to treat neurocognitive disorders, rose nearly 344%.
Companies that have announced their financial reports:
Tesla: Tesla fell 2.04% and fell more than 8% after hours. Due to the impact of car price reductions and AI investment on profit, Tesla's Q2 profit plummeted by double digits, overperforming expectations, and the release of the Robotaxi for autonomous taxis was postponed from August to October.
Google: Google rose 0.07% and shook after hours. Google's Q2 revenue and profit exceeded expectations, with quarterly cloud revenue exceeding $10 billion for the first time, but YouTube advertising revenue was below expectations, and capital expenditure on AI investment was $13.186 billion, exceeding the $12 billion in the first quarter, which raised concerns about the backlog of profit margins.
Coca-Cola: Coca-Cola opened up more than 2% and then gave back most of its gains, eventually rising slightly by 0.29%. Coca-Cola's Q2 revenue increased by 2.9% year-on-year, exceeding expectations, while net profit fell by 28.8%, and the full-year guidance was raised.
UPS: United Parcel Service fell 12.05%, with the largest drop since its listing. The company's second-quarter revenue and adjusted earnings per share were below expectations, and it lowered its 2024 revenue guidance. UPS CFO said that the number of layoffs has reached 11,500, with a target of 12,000.
General Motors: it once fell more than 7.5% during the day and eventually fell 6.42%. Thanks to strong demand from major models, GM's Q2 revenue hit a record high for the quarter, with adjusted net profit surging 37% YoY, and it raised its full-year profit guidance. However, the company said that it will postpone the launch of the Buick electric vehicle originally planned for 2024 and postpone the opening time of the electric pickup truck factory by 6 months to 2026, which caused the stock price to fall.
NXP Semiconductors: it fell more than 10% during the day and eventually fell 7.58%, mainly due to the weakness in the automotive industry, and its third-quarter revenue guidance was not good.
Porsche (ADR): It finally fell 3.9%, with the largest drop in European stocks. The company announced that it expects full-year revenue of 39 billion-40 billion euros, lower than the original forecast of 40 billion-42 billion euros, due to a shortage of special aluminum alloy supply, which will cause the company's production to be impaired. The factory of an important supplier in Europe was flooded.
SAP SE: SAP rose 7.13%, mainly due to the boost in demand for AI, and SAP's Q2 cloud revenue surged 25%.
ASM International: Thanks to the AI trend, the Dutch wafer equipment manufacturer ASM International's Q2 order exceeded expectations and raised its revenue growth in the second half of the year. After the financial report was released, ASM International's gains expanded from more than 2% to more than 8.4% and finally rose by 4.25%.
LVMH: This year, overseas luxury brands have been losing ground in China, and LVMH, the world's largest luxury goods group, has seen its sales decline rapidly in China and other Asian regions for two consecutive quarters.
Spotify: rose nearly 16.2% at one point in the session and closed up 11.96%. After introducing price increases, Spotify's second-quarter paid users increased by 12% year-on-year, reaching 246 million, exceeding the market's expected 245.2 million.
As investors evaluated a series of latest quarterly reports, European stocks closed slightly higher, rising for two consecutive days, with German SAP leading the gains, up more than 7%:
The pan-European Stoxx 600 index rose 0.13% to 515.47. The Eurozone STOXX 50 index rose 0.40% to 4916.80. Among all the constituent stocks of the European STOXX 600 index, Germany's SAP rose 7.15%, and ASM International rose 4.18%.
The German DAX 30 index rose 0.82%. The French CAC 40 index fell 0.31%. The Italian FTSE MIB index rose 0.07%. The UK FTSE 100 index fell 0.38%. The Netherlands AEX index fell 0.22%. The Spanish IBEX 35 index rose 0.62%.
Demand for US Treasury two-year bond auction was strong, and vice president Harris was slightly ahead of Trump in the latest poll, pushing down yields of US debt across the board. The two-year US Treasury yield fell by three basis points.
Towards the end of the trading session, the two-year US Treasury yield, which is more sensitive to monetary policy, fell 3.00 basis points to 4.4871%, and quickly fell to a daily low of 4.4764% after the release of the US Treasury's continued results for the two-year bond issuance at 01:00 Beijing time. The yield on the benchmark 10-year US Treasury bond fell 0.98 basis points to 4.2427%, and refreshed a daily low of 4.2194% at 23:42 Beijing time.
The record demand for two-year Treasury notes sold highlights the market's confidence that the Fed will begin cutting interest rates this year. Direct and indirect bidders received 91% of the allotment, the highest since 2003. The allotment ratio for primary dealers was 9%, the lowest ever recorded.
The benchmark 10-year German bond yield in the euro zone fell by 5.7 basis points to 2.439%, with trading ranging between 2.495% and 2.434% during the session. The two-year German bond yield fell by 11.6 basis points to 2.714%, with trading ranging between 2.775% and 2.713% during the session.
The French 10-year Treasury notes yield fell by 1.7 basis points, the Italian 10-year Treasury notes yield fell by 2.7 basis points, the Spanish 10-year Treasury notes yield fell by 3.1 basis points, and the Greek 10-year Treasury notes yield fell by 1.1 basis points. The UK 10-year Treasury notes yield fell by 3.8 basis points to refresh its daily low of 4.122%.
Analysis shows that investors are focusing on the prospect of a central bank rate cut amid trembling risk sentiment and thin liquidity. The two-year German bond yield fell more than 11 basis points and UK bond yields generally fell by about 4 basis points. ECB Vice President de Guindos said September is a "more convenient" time for ECB decisions. Traders have raised their bets on an ECB rate cut, with a forecast of a 46 basis point cut in 2024, up from the expected 43 basis points on Monday.
Affected by the resumption of Middle East ceasefire negotiations and the bleak outlook for oil demand, RBOB gasoline prices fell for four consecutive days to a six-week low, and Brent October contracts fell below $80.
The strengthening of the US dollar has suppressed oil prices, which have fallen for four consecutive days, marking the longest decline since early June. The September WTI oil futures fell $1.44, or about 1.84%, to $76.96 per barrel. September Brent crude oil futures fell $1.39, or about 1.69%, to $81.01 per barrel.
US and Brent crude oil rose slightly after opening lower, with US oil rising over 0.42% and Brent oil rising over 0.47% during European stock trading hours. Subsequently, both accelerated their decline, with US oil falling to a low of nearly 2.6%, approaching the $76 per barrel mark during midday trading in the US; September Brent contract fell nearly 2.3% to nearly the $80 per barrel mark, and the October contract fell below the psychological threshold of $80 per barrel for the first time since June 10. Both partially recovered ground at the close of US trading.
Analysis shows that future oil prices depend largely on the Fed's interest rate cuts and the progress of negotiations in the Middle East. After oil prices fell below the 50-day and 100-day moving averages, commodity trading advisors sold long positions. Algorithmic trading and low summer liquidity have both put pressure on the market. Summer gasoline demand did not push up oil prices, and EIA data shows that gasoline demand fell on average by 0.615 million barrels per day as of the week of July 12.
Goldman Sachs said on Tuesday that because the market basically ignored the potential threat to crude oil supply from Middle East tensions, the risk premium for oil prices is still close to zero.
US Henry Hub natural gas futures fell 2.84% to $2.187 per million British thermal units in August. The European benchmark TTF Dutch natural gas futures fell 0.68% to €31.622/MWh; ICE UK natural gas futures rose 2.21% to 80.76 pence/therm at the end of the trading day.
The US dollar rose, with the yen up more than 0.9% to break through 156, and ethereum ETFs traded for the first day fell 3.6% and lost $0.066 million.
The US dollar index DXY, which measures against six major currencies, rose 0.12% to 104.436, trading in a range of 104.204-104.535 during the day.
The Bloomberg Dollar Spot Index rose 0.16% to 1,257.25, trading in a range of 1,253.69-1,257.27 during the day.
Most non-US currencies fell. The euro fell 0.33% against the US dollar, the pound fell 0.20% against the US dollar, and the US dollar rose 0.20% against the Swiss franc.
Offshore renminbi (CNH) rose 70 points against the US dollar to 7.2891 yuan, and overall trading was in the range of 7.2973-7.2856 yuan.
Among Asian currencies, the US dollar fell 0.92% against the yen, trading at 155.59 yen, with a daily trading range of 157.10-155.54 yen. The euro fell 1.25% against the yen to 168.87 yen, and the pound fell 1.13% against the yen to 200.807 yen.
Mainstream cryptocurrency rose and fell. Bitcoin, the largest market capitalization, fell 3.59% to $65,885.00, losing the $0.066 million mark. The second largest ethereum fell 0.11% to $3,488.00.
It is noteworthy that on Tuesday, ether ETFs officially began trading in the United States, with the first batch of funds including BlackRock and Grayscale.
Investors are focusing on economic data this week in search of clues for rate cuts, as well as increased demand for gold in India, which has supported a small rebound in gold prices, ending the four-day decline.
Comex August gold futures rose 0.51% to $2,406.8 per ounce, breaking a four-day losing streak, and Comex September silver futures rose slightly by 0.03% to $29.330 per ounce.
Spot gold prices fell and then rose, breaking through $2,400 per ounce in early Asian trading before falling below $2,390, down about 0.35%; then rebounding quickly during European stock trading hours, hitting above $2,410 per ounce, up nearly 0.65%; and closing slightly lower at the end of US trading.
Spot silver reached its intraday high in early Asian trading, up more than 0.58%, but fell to its intraday low before European stock trading, down nearly 1.57%, and rose slightly at the end of trading.
Analysis shows that the market focus has shifted from the US political situation to US economic data, such as Thursday's US GDP and Friday's PCE data. The market is still pricing in two interest rate cuts this year and assumes that the Fed will begin cutting interest rates in September. Any weaker-than-expected inflation data will be bullish for gold. India has significantly reduced gold and silver import tariffs, which is favorable for boosting India's retail demand for gold and driving up gold prices.
Goldman Sachs predicts that the potential for long positions in gold is huge and gold prices will reach $2700/ounce next year. This is due to central banks around the world steadfastly buying gold, a possible US interest rate cut, and safe-haven demand triggered by geopolitical tensions.
London industrial metals have been falling collectively for several days. The "Copper Doctor" fell by $50 to $9166/ton. London aluminum fell by $4 to $2295/ton. London zinc fell by $38, a decline of over 1.39%, to $2688/ton. London lead fell by $24, a decline of over 1.5%, to $2060/ton. London nickel fell by $169, a decline of over 1.04%, to $16021/ton. London tin fell by $470, a decline of over 1.57%, to $29418/ton.
Editor / jayden