Wall Street opened the week with mixed movements as investors turned their focus towards upcoming tech earnings and a crucial Federal Reserve meeting. The Nasdaq Composite saw a slight uptick, lifted by gains in tech stocks like Tesla and On Semiconductor, while the Dow Jones faced minor losses. Market sentiment is hinged on the forthcoming earnings reports from major players such as Microsoft and Apple, as well as the Fed’s policy guidance, which could set the tone for market trends in the coming months.

Key Takeaways:

  • Nasdaq Gains Amid Tech Rally and Earnings Anticipation: The Nasdaq Composite rose by 0.07%, closing at 17,370.20. The index experienced a slight lift, driven by gains in tech stocks such as On Semiconductor and Tesla, as investors anticipated positive outcomes from upcoming earnings reports in the tech sector.
  • S&P 500 Shows Continued Resilience: The S&P 500 saw a modest increase of 0.08%, finishing at 5,463.54. This movement highlights the index’s ongoing resilience as market participants await key earnings reports and potential policy signals from the Federal Reserve.
  • Dow Jones Posts Modest Decline: The Dow Jones Industrial Average experienced a slight dip, losing 49.41 points, or 0.12%, to close at 40,539.93. This marginal decline reflects a cautious investor sentiment, with the Dow showing less enthusiasm compared to its tech-heavy counterparts.
  • Small-Cap Index Russell 2000 Faces Potential Bearish Signal: The Russell 2000 was on the verge of an “outside day,” a bearish technical indicator, if it closed below 2,238.67. Despite this potential signal, the index has performed strongly in July, rising over 9% compared to the S&P 500’s 0.3% gain, driven by sector rotations within the equity market.
  • European Markets Mixed Amid Earnings Season: European markets closed lower, with the Stoxx 600 index dropping 0.18%, while the FTSE 100 edged up slightly by 0.08%. The CAC 40 declined by 0.92%, nearing a six-month low. Notably, Philips shares surged up to 15% on strong earnings, while Heineken’s shares fell over 9% due to disappointing profit growth.
  • Asian Markets Rebound Led by Japan’s Nikkei: The Nikkei 225 led gains in Asia, rising 2.13% as Japan’s market rebounded from an eight-day losing streak. The Topix index also climbed 2.23%. Mitsubishi Motors saw a 5% increase amid positive news of joining the Honda-Nissan alliance. However, Eisai shares fell 13% after a setback with its Alzheimer’s treatment approval in Europe. Hong Kong’s Hang Seng index rose 1.64%, while South Korea’s Kospi increased by 1.23%. China’s CSI 300 index declined by 0.54%, weighed down by real estate stocks.
  • Treasury Yields Drop: U.S. Treasury yields fell, with the 10-year yield down by more than 2 basis points at 4.171% and the 2-year yield at 4.387%, as investors awaited key economic data and the Federal Reserve’s meeting later in the week.
  • Oil Prices Decline Amid Geopolitical Concerns: U.S. crude oil prices fell by 2%, with West Texas Intermediate closing at $75.63 per barrel and Brent crude at $79.65 per barrel. The drop reflects concerns over global demand, particularly from China, and increased geopolitical tensions in the Middle East, notably after a rocket attack in the Israel-occupied Golan Heights.
  • CBI UK Retail Sales Fall Sharply: The Confederation of British Industry (CBI) reported a significant drop in the UK retail sales balance to -43% in July, from -24% in June. This sharper-than-expected decline was attributed to unfavourable weather conditions and heightened market uncertainty.
  • Arm Holdings Downgrade Pressures Stock: Arm Holdings’ shares fell by 5% following a downgrade by HSBC, which cited concerns about the company’s prospects in the AI PC market and broader smartphone sector challenges. The downgrade reflects a cautious view of the company’s future earnings growth.
  • Bitcoin Prices Weaken After Trump’s Comments: Bitcoin prices fell by more than 1%, trading at $66,930.28, following remarks by former President Donald Trump criticising the regulatory environment for cryptocurrencies. The market is also focused on upcoming central bank meetings, particularly the Federal Reserve’s stance on digital currency regulations.

FX Today:

  • USD/JPY Consolidates Around Key Levels: The USD/JPY pair traded with slight gains, closing at 154.00, amid lower U.S. Treasury yields and a broader risk-on sentiment. Despite the minor uptick of 0.18%, the pair remains under pressure, with crucial support levels at 153.00 and 151.93. A break below these supports could see further declines toward the 151.00 mark.
  • EUR/USD Sees Limited Movement: The EUR/USD pair dipped by 0.31%, trading at 1.0822. The pair is currently constrained within a range, with support at 1.0825 and resistance at 1.0870/75. The lower end of the range is bolstered by the 200-day moving average at 1.0820. Loss of support in the low 1.08s could lead to a drop toward the 1.0725/75 area, though the longer-term trend remains supportive above these levels.
  • NZD/JPY Under Pressure: The NZD/JPY pair continued its downward trend, slipping to 90.50. This marks the thirteenth decline in the past fourteen sessions, pushing the pair significantly below the 200-day Simple Moving Average (SMA) at 92.15. Key support levels are now at 90.50, 90.30, and 90.00, with resistance at the 92.50 and 94.20 levels. The pair has fallen over 7% since the beginning of July, indicating strong bearish momentum.
  • USD/CAD Continues Uptrend: The USD/CAD pair climbed 0.1% to 1.3853, maintaining its upward trajectory. The pair has been in a bullish phase, rising approximately 2% from a recent low of 1.3589. Key resistance levels are at 1.3864, with support at 1.3817. This movement reflects the Canadian dollar’s weakness against the U.S. dollar amid broader market conditions.
  • Gold Prices Dip: Gold prices fell to $2,377, down from a daily high of $2,403. The metal faces critical support at the 50-day moving average of $2,358 and the recent low of $2,353. If these levels are breached, gold could see further declines toward the $2,300 mark. The recent dip in gold prices reflects a stronger U.S. dollar and investor caution ahead of key central bank meetings.

Market Movers:

  • On Semiconductor Skyrockets: On Semiconductor’s stock surged by 11.5% after the company reported better-than-expected earnings and revenue for the second quarter. The chipmaker’s strong performance made it the best performer in the S&P 500 on Monday, underscoring robust demand in the semiconductor sector.
  • Tesla Gains Following Endorsement: Tesla shares rose 5.6%, driven by positive sentiment after being named the top pick among U.S. auto stocks by Morgan Stanley. The endorsement highlighted Tesla’s strong market position and potential for growth in the electric vehicle sector, pushing its stock higher.
  • McDonald’s Rises Despite Earnings Miss: McDonald’s stock jumped nearly 4%, as investors reacted positively to the company’s strategic focus on value meals, aimed at attracting budget-conscious consumers. This rise came even though the fast-food giant’s quarterly earnings and revenue fell short of Wall Street expectations.
  • Revvity Advances on Earnings Beat: Revvity shares climbed 9% following a strong second-quarter earnings report. The life sciences company’s adjusted earnings of $1.22 per share surpassed the FactSet estimate of $1.12, while revenue reached $691.7 million, exceeding the forecast of $690.3 million.
  • Stellantis Drops: Stellantis shares declined by around 4%, hitting a new 52-week low. This drop followed a downgrade from Deutsche Bank, which cited challenges in inventory management, pricing, and model updates compared to peers. The downgrade reflects a tougher operating environment for the automaker.
  • Walt Disney Climbs on Box Office Success: Walt Disney shares rose 2.5%, boosted by the strong performance of its latest Marvel movie, “Deadpool & Wolverine,” which grossed over $200 million domestically in its opening weekend. This marks a record debut for an R-rated film, enhancing investor confidence in Disney’s entertainment lineup.

As the market navigates a week of critical earnings and policy announcements, the modest gains in the Nasdaq and S&P 500 reflect a slight optimism among investors. The strong performances of On Semiconductor and Tesla underscore resilience in the tech sector, while mixed signals from the broader market highlight ongoing uncertainties. The upcoming Federal Reserve meeting looms large, with potential implications for interest rates and market sentiment. Meanwhile, geopolitical tensions and fluctuating commodity prices continue to influence market dynamics. As key tech companies release their earnings and global economic developments unfold, investors remain alert, looking for cues that could shape the market’s direction in the near term.