Source: Wall Street News Author: Fang Jiayao, Du Yu

Wall Street is preparing for a busy corporate earnings week. Microsoft, Meta, Apple, and Amazon will all release their quarterly results this week, and these reports will help determine whether tech stocks can rebound from last week's slump. The stock prices of these companies and Tesla rose on Monday, driving slight gains in the S&P 500 and Nasdaq. Among the 11 sector of the S&P 500 index, the S&P consumer staples sector rose by 1.42%, the telecommunications sector rose by 0.87%, while the information technology/technology sector fell by 0.33%, and the energy sector fell by 0.87%.

Small-cap stock indexes led the decline by falling more than 1%, while the S&P and Nasdaq edged up slightly. After the surge of semiconductor stocks, they tumbled and turned down, with Nvidia rising more than 2.8% before dropping 1.3%, and Tesla closing strongly up 5.6%.

On Monday, US stock indices were mixed with small-cap and blue-chip stocks weakening, while technology stocks slightly rose.

Major US stock indices all turned negative after an opening surge on Monday. The Russell 2000 small-cap index rose by more than 0.4% at the opening before falling by more than 1.4% at the close, down 1.09% overall. The Dow Jones, closely tied to the economic cycle, rose nearly 0.23% at its peak before falling by nearly 0.5%, down 0.12% at the close. The S&P 500, opened higher by more than 0.5%, lows exceeded 0.2%, closed up 0.08%. The Nasdaq, primarily consisting of tech stocks, rose more than 1% early on before turning negative and eventually ending slightly up, with a gain of 0.07%.

At the close, small-cap indices led the decline, falling more than 1%:

The S&P 500 Index closed up by 4.44 points, or 0.08%, at 5463.54. The Dow Jones closed down by 49.41 points, or 0.12%, at 40539.93. The Nasdaq closed up by 12.32 points, or 0.07%, at 17370.20.

The Nasdaq 100 closed up by 0.19%; The Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of the Nasdaq 100 technology stocks, closed down 0.11%; The Russell 2000 index closed down 1.09%; The VIX, fear index, rose 1.22% to close at 16.59.

Among the 11 sectors of the S&P 500 index, the S&P consumer staples sector rose by 1.42%, the telecommunications sector rose by 0.87%, while the information technology/technology sector fell by 0.33%, and the energy sector fell by 0.87%.

Regarding investment strategies:

Goldman Sachs pointed out that last week, the net selling of the hedge fund industry in the United States industrial sector hit a new historical high.

All of the 'Tech Seven Sisters' except for Nvidia rose. Tesla rose nearly 6.6% in early trading and finally closed up 5.6%. Google A rose more than 1.5%, Amazon rose 0.38%, Microsoft rose 0.34%, Apple rose 0.13%, Meta held steady, while Nvidia accelerated after rising more than 2.8% in early trading and finally closed down 1.3%.

It is noteworthy that Morgan Stanley has nominated Tesla as its preferred auto stock in the U.S. auto industry, replacing Ford Motor, and believes that Tesla's stock price has a 40% upside potential, but says Tesla's expectations for autonomous taxis are 'too high.' Influenced by this news, Tesla reversed last week's slump of 8.11%, and rose 5.6% on Monday.

In addition, Apple released the first version of iPhone AI (Apple Intelligence). Only developers who have registered for the annual fee of $99 can obtain the iOS 18.1 test. On July 29, Apple said in a technical paper that two AI models that Apple Intelligence relies on were pre-trained on Google-designed cloud chips. Apple's decision indicates that in terms of AI training, some large tech companies may be looking for and finding alternatives to Nvidia graphics processing units.

Aletheia Capital upgraded its rating on Apple from sell to hold. Credit Suisse raised its target price for Apple from $220 to $250.

After the initial surge, chip stocks plunged and turned negative. The Philadelphia Semiconductor Index fell 0.3%; the industry ETF SOXX fell 0.21%; Nvidia's two times long ETF fell 2.78%.

Popular chip stocks saw mixed gains and losses. ASML Holding rose 11.54%, hitting its largest daily gain since 2022; while KLA Corp fell 1.22%, Qualcomm fell 0.78%, Taiwan Semiconductor's US shares fell 1.19%, Broadcom fell 0.93%, AMD fell 0.17%, Micron Technology fell 1.43%, Intel fell 1.66%, and Arm Holdings fell 5.07%.

HSBC downgraded its rating on Arm Holdings and expects the stock price to fall by nearly 30%. Analyst Frank Lee downgraded the stock to 'sell' and said that although patent fees are high, the AI PC narrative is not as optimistic as previously thought. Although we are bullish on the proportion of chip patent usage fees for AI personal computers (central processing units) rising from 5% to 10% of the average selling price, and the average selling price per core will also increase, the overall unit situation (total potential market) still lacks transparency.

AI concept stocks saw mixed gains and losses. The 2.0 version of Nvidia concept stocks, self-driving sidewalk robot distribution company Serve Robotics, rose 46.67%; Snowflake rose 0.44%; CrowdStrike rose 1.03%; BullFrog AI rose 0.33%; while Nvidia concept stock SoundHound fell 6.64%, Palantir fell 0.37%, Oracle fell 0.5%, Dell fell 2.08%, and BigBear.ai fell 6.58%.

China concept stocks were up and down. The Nasdaq Golden Dragon China Index fell 0.13%. Among ETFs, the China Technology Index ETF (CQQQ) fell 0.61%. The China Internet Index ETF (KWEB) rose 0.15%.

Among popular China concept stocks, Joyy Inc rose 3.3%, Tencent Holdings (ADR) rose 0.11%, Li Auto Inc. rose 0.78%, JD.com rose 0.18%, Bilibili rose 1.27%, Baidu rose 1.71%, Alibaba rose 2.73%, while Xpeng fell 3.17%, PDD Holdings fell 2.45%, NetEase fell 1.52%, and Nio Inc fell 0.9%.

Other stocks that have changed significantly due to yesterday's after-hours and today's pre-market financial reports:

On Semiconductor rose 11.54%. The earnings report showed that the adjusted EPS for the second quarter of on Semiconductor was $0.96 (analyst expectations were $0.92), and revenue was $1.74 billion (analyst expectations were $1.73 billion). The third-quarter revenue is expected to be $1.7 billion-$1.8 billion (analysts' expectations are $1.78 billion).

Lattice Semiconductor (LSCC) fell more than 10.84% in post-market trading. Lattice Semiconductor's adjusted EPS for the second quarter was $0.23, and analysts expected $0.24. The second-quarter revenue was $0.1241 billion, and analysts expected $0.1302 billion. The third-quarter revenue is expected to be $0.117 billion-$0.137 billion, and analysts expect $0.1417 billion.

Amkor Technology (AMKR) fell 6.33% in post-market trading. Amkor Technology (Amkor) expects its third-quarter EPS to be $0.42-$0.56, lower than analysts' expected $0.64. The third-quarter net sales are expected to be $1.79 billion-$1.89 billion, and analysts expect $1.87 billion.

American e-commerce company Beyond Inc. reported quarterly losses lower than expected and net revenue higher than expected, with the stock price rising by 17% in post-market trading. After adjustments, EBITDA for the second quarter was a loss of US$36.4 million, while the market expected a loss of US$37.8 million. The second-quarter net revenue was $0.3981 billion, and the market expected $0.3819 billion.

Among stocks with significant volatility:

Most digital currency/blockchain concept stocks fell. Stronghold fell by 8.7%, Canaan ADR fell more than 7.3%, Bitfarms and Marathon Digital fell by about 5.2%, 'Bitcoin position big holder' MicroStrategy fell by about 3.9%, and cryptocurrency exchange Coinbase fell by about 3.6%. The spot ether ETF iShares Ethereum Trust ETF (ERTHA) rose more than 1%, the two-way short bitcoin ETF SBIT rose more than 2.3%, and Ideanomics IDEX rose 25.93%.

European stocks reversed last Friday's and early gains, closing lower. Investors are focusing on the release of reports from many companies this week and the Bank of England's interest rate meeting:

The pan-European Stoxx 600 index fell 0.20% to 511.79 points. The euro area STOXX 50 index fell 0.97% to 4815.39 points. Most sectors fell, with the auto sector leading the way, down 1.35%, and automaker Stellantis down 3.33%, the worst performer, while the healthcare sector rose 0.66%.

The German DAX 30 index fell 0.53%. The French CAC 40 index fell 0.98%. The Italian FTSE MIB index fell 0.51%. The UK FTSE 100 index rose 0.08%. The Netherlands AEX index fell 0.28%. The Spanish IBEX 35 index fell 0.43%.

Among stocks with significant volatility:

Due to the slower-than-expected growth in profits in the first half of this year, the stock price of the beer giant Heineken fell by more than 10%. The latest performance report shows that Heineken's organic growth in the first half of the year was 5.9% (analysts expected growth of 7.89%), and the operating profit for the full year is expected to increase by 4%-8%.

Because the second-quarter earnings were better than expected, Royal Philips' U.S. stocks rose more than 14% at one point. Royal Philips' adjusted EBITDA for the second quarter was EUR 0.495 billion, and analysts' expectations were EUR 0.4263 billion.

European luxury brand stocks generally fell. Hermes fell 2.36%, almost completely giving back last Friday's gains; Burberry, L'Oreal, Kering, LVMH, and Hugo Boss fell 1.55% to 1.19%, Johnnie Walker fell 0.61%, and Kering Group fell 0.42%.

The U.S. Treasury yield is expected to record the longest consecutive monthly decline in three years, and the yield on 10-year Treasury bonds has fallen by about three basis points. Yellen has cut the U.S. Treasury's third-quarter financing expectations.

Late in the session, the two-year U.S. Treasury yield, which is more sensitive to monetary policy, fell 0.62 basis points to 4.3791%, trading between 4.3565% and 4.3997% during the session. The yield on the 10-year benchmark U.S. Treasury note fell 2.92 basis points to 4.1647%. After the U.S. Treasury Department released its quarterly funding expectations report at 03:00 Beijing time, the drop in yields widened, with a low of 4.1492% at 20:41.

Later this week, the Federal Reserve will issue a statement on interest rates. According to the latest data on the U.S. Treasury Department's website, the size of the U.S. federal government debt has reached $34.997 trillion, which is only one step away from the $35 trillion mark. According to data from the U.S. Department of the Treasury, as of July 25, the size of federal government debt has approached the 35 trillion US dollar mark. According to calculations by the Peterson Institute for International Economics, these huge debts, if shared among Americans, would be equivalent to nearly 0.104 million US dollars per capita.

Traders "ignored" the escalation of conflicts between Israel and Hezbollah. U.S. crude oil fell nearly 2% and fell below the 200-day moving average, while Brent crude oil fell below the $80 level for the first time since June 10.

WTI September crude oil futures fell $1.35, or nearly 1.75%, to $75.81 a barrel, breaking through the 200-day moving average (the technical indicator was reported at $76.73), approaching the June 7th closing price of $74.80. Brent September crude oil futures fell $1.35, or more than 1.66%, to $79.78 a barrel. Brent fell below the psychological threshold of $80 per barrel for the first time since June 10th.

Before European stocks opened, oil prices touched their daily highs, with U.S. oil rising nearly 0.69% to break through $77.50 a barrel, and Brent rising more than 0.75% to rise above $81.70 a barrel. Oil prices then continued to fall sharply, and when U.S. stocks hit new lows during midday trading, U.S. oil and Brent both fell by about 2.3% and 2.2%, respectively, approaching the 75 and 79 USD thresholds, respectively. Later, both rebounded slightly.

Analysts said that due to traders seemingly not worrying about the risk of the conflict between Israel and Iranian-backed militia Hezbollah expanding, U.S. crude oil futures fell nearly 2% on Monday. Last Saturday, a rocket from Lebanon caused casualties in the Israeli-controlled Golan Heights. The Israeli side blamed Hezbollah for the attack. However, Hezbollah has denied the accusation. On the 28th, the Israeli Security Cabinet authorized Prime Minister Benjamin Netanyahu to decide how and when to respond to the Hezbollah rocket attack in Lebanon.

Helima Croft, director of Royal Bank of Canada's strategy, said that the escalation of the geopolitical conflict between Israel and Iran in the spring of this year pushed up oil prices, but since the firepower exchange between Iran and Israel in April did not trigger a larger conflict and did not pose a substantial threat to energy supply, the oil market is relatively indifferent to the Middle East conflict. Nevertheless, since Hezbollah's interests in Iran's region are crucial, direct conflict between Israel and Hezbollah could become a catalyst for OPEC member Iran to get involved in the conflict.

US natural gas futures fell more than 4.93% in August, to 1.9070 US dollars/million British thermal units. The European benchmark TTF Dutch natural gas futures rose 4.70% to 33.975 euros/megawatt-hour, rising to 34.303 euros at one point, approaching the top of 36.500 euros on July 2. ICE UK natural gas futures rose 4.78% to 79.850 pence/kilocalorie, approaching the top of 83.150 pence on July 1.

Analysts said that North Asian heat waves have raised concerns about fuel supplies, and European natural gas futures rose 4.7%, reaching a one-month high.

Central bank interest rate meetings of many countries will be held later this week. The US dollar has risen slightly by more than 0.2%, and the expectation of the Bank of Japan's rate hike has supported the rise of the yen, which rose above 154. Bitcoin futures briefly rose above the 0.07 million US dollar mark.

The US dollar index, which measures against six major currencies, rose 0.23% to 104.558, with a daily trading range of 104.138-104.752.

Bloomberg's US dollar index rose 0.26% to 1,260.34, with a daily trading range of 1,255.33-1,262.15.

Most non-US currencies fell. The euro fell 0.35% against the US dollar, the British pound fell 0.05% against the US dollar, and the US dollar rose 0.34% against the Swiss franc.

Offshore renminbi (CNH) against the US dollar fell by 81 points, to 7.2716 yuan, with overall trading ranging 7.2587-7.2739 yuan.

It is worth noting that UBS Asset Management recently released a report stating that investigations showed that central banks around the world planned to further increase their positions in the euro and the renminbi in the coming year, and 70% of respondents were investing in or considering investing in renminbi. In the long term (10 years), the average target allocation of respondents to the renminbi accounts for 5.0% of their total reserves.

Among Asian currencies, the US dollar rose 0.14% against the yen, to 153.98 yen, with a daily trading range of 153.02-154.35 yen. The euro fell 0.17% against the yen, to 166.65 yen; the British pound rose 0.10% against the yen, to 198.043 yen.

It is worth mentioning that the Bank of Japan will release a detailed plan for quantitative tightening (QT) on Wednesday, when it will announce the first plan to reduce the scale of bond purchases. Insiders said that Bank of Japan officials have no intention of cutting the scale of bond purchases in a way that surprises market participants, and they are well aware of external expectations. Currently, the market generally believes that the monthly scale of bond purchases will be reduced from the current 6 trillion yen to 5 trillion yen next month, and will eventually be halved in two years.

Although only about 30% of Bank of Japan watchers regard interest rate hikes as the basic scenario, almost no one excludes the possibility. Insiders revealed that some Bank of Japan officials are open to raising interest rates this month when inflation basically meets expectations; others believe that they will remain static while waiting for more data to see signs of a recovery in consumer spending. The implied probability of a 15 basis point rate hike by July 31 is about 50%, up from 25% a week ago.

Bank of America believes that if the Bank of Japan raises interest rates on Wednesday and hints at a rapid reduction in bond purchases (such as reducing the monthly scale of bond purchases to about 3 trillion yen within a year), the market will regard this as the Bank of Japan turning to hawks and betting on faster rate hikes. The yen against the U.S. dollar is expected to rise to 145-148 yen, the highest level since January.

The bet against the yen by hedge funds saw the largest retreat since 2011. Data from the U.S. Commodity Futures Trading Commission shows that leveraged investors reduced their net short yen positions by 56,639 contracts in the two weeks ending July 23, the largest since early 2011. Although still short, the funds are now the least bearish on the yen since February.

Cryptos have mixed gains and losses. The largest market-cap leader, Bitcoin, fell by 1.30% to $67,880.00, with a high of $70,825.00 during the session. The spot Bitcoin was priced at $67,176.31, down 1.22% on the day, and peaked at $69,998.25 on the day, Beijing time 21:06.

The second largest Ethereum rose 1.50% to $3,356.50, and rose to $3,430.00 during the session.

The rise of the US dollar puts pressure on gold prices, traders are paying attention to the Fed's interest rate meeting this week.

The rising US dollar is pushing down precious metal prices. COMEX August gold futures closed up 0.05% at $2,382.2 per ounce, while COMEX September silver futures closed up 0.07% at $28.040 per ounce.

Spot gold rose close to 0.68% during early Asian trading, refreshing its daily high and hitting above the $2,400/ounce level. US stocks maintained their upward momentum before the market, and then fell during early US trading, with the lowest point falling more than 0.7% to near $2,360. Silver rose more than 0.9% in early Asian trading to break through the $28 level, but fell more than 2.2% during early US trading to around $27, and then slightly rebounded during the session.

According to analysis, the USD increased by about 0.3%, reaching a new high of over two weeks, making it more expensive for holders of other currencies to buy gold. In the first half of 2024, the consumption of gold in the world's largest gold-consuming country decreased by 5.6%, due to a decrease in demand for gold jewelry. However, the purchase of gold bars and coins has increased.

After the Golan Heights occupied by Israel was hit by rockets, concerns about the escalation of geopolitical conflicts increased. As a safe-haven asset for geopolitical risks, demand for gold was still supported. According to the latest data from the World Gold Council, gold ETFs for investors to store gold saw a net inflow of 9.8 tons last week. In July, gold ETFs are expected to see a continuous net inflow of 39 tons for the third consecutive month. The World Gold Council said that in another major gold consumer country, India, due to the country's reduction of import tariffs on gold to the lowest level in 11 years, it is expected that the demand for jewelry and gold bars and coins in the second half of 2024 will increase by 50 tons from the decrease last year.

Most of the London industrial metals have fallen for several days. The economic indicator, 'Dr. Copper' fell by 0.93% to $9,026/ton. London aluminum fell by 1.66% to $2,250/ton. London zinc fell by about 1.20% to $2,637/ton. London lead remained flat at $2,068/ton. London nickel rose by $43 to $15,837/ton. London tin fell by about 0.93% to $29,296/ton.

Recently, after the gold price reached a new high, it encountered a sudden brake. In addition, the prices of metals such as copper, aluminum, and nickel have been falling continuously since hitting a phase top in late May. A private equity manager in Shanghai said that for investors who are risk averse, physical investment should wait for a further gold price correction. For medium-term investment, logic should be considered, and unless good at timing, ordinary investors should not buy too much at once and can add positions multiple times. The person also said that golden industrial concept stocks are more resilient than gold. Investors who prefer high returns can buy golden industrial concept stocks or related funds, and investors who prefer low volatility can choose physical gold or gold ETFs.

Editor/Lambor