Cody Huelster
All Eyes on Big Tech: Investors vs Earning Reports
Today’s market opening saw a minor surge as market participants readied themselves for earnings data from tech behemoths and the upcoming July jobs report. The S&P 500 (^GSPC) saw a slight uptick of 0.15%, while the Dow Jones Industrial Average (^DJI) climbed up 0.28%. Nasdaq Composite (^IXIC), the tech-centric index, made marginal gains of about 0.21%, reflecting the eager anticipation for the upcoming tech earnings.
The day’s narrative pivoted around the tech sector, largely shaped by the anticipation for the second-quarter results from industry giants Apple (AAPL) and Amazon (AMZN). Apple’s Vision Pro headset, with its groundbreaking augmented reality technology, has been a subject of intense investor speculation. The company’s ambitious efforts to diversify into the wearable tech market have sparked enthusiasm, and today was no exception.
Amazon’s story unfolded differently, with market participants closely following the e-commerce titan’s cloud business. Amazon’s foray into the cloud space has already disrupted the industry, and stakeholders were keen to see how the segment has performed in Q2.
On a broader scale, the tech-weighted Nasdaq Composite index continued its five-month winning streak, contributing to an impressive year-to-date gain of 37%. Meanwhile, the S&P 500 also held strong with a 19.5% increase since the beginning of the year, underpinned by positive earnings results across multiple sectors. The Dow Jones Industrial Average played catch-up, reflecting a respectable 7.3% increase since the year’s outset.
Several stocks stood out from the crowd, either by outperforming the market or presenting unexpected turns. One such standout was SoFi (SOFI), which surged nearly 20% after reporting better-than-expected earnings. This surge was seen as a testament to SoFi’s competitive advantage in the fintech space and its successful user acquisition strategies.
Similarly, Palantir (PLTR) climbed 8% after Wedbush increased its price target. The stock’s upward trajectory came on the heels of a number of successful government contracts and an optimistic forecast for its Gotham platform. Adobe (ADBE) was another strong performer, rising 3% as Morgan Stanley offered a bullish take on its future growth prospects.
On the other end of the spectrum, electric vehicle manufacturer Nikola (NKLA) gained attention as it announced an agreement to sell 13 electric trucks to J.B. Hunt Transport (JBHT). The agreement, signaling a growing demand for eco-friendly vehicles, sparked an 18% rise in Nikola’s stock price.
The earnings season is in full swing, with market attention focused on tech behemoths Apple and Amazon, both reporting on August 3rd. Investors eagerly awaited to see if Apple’s promising AR tech, embedded in its Vision Pro headset, and the continued strength of its iPhone sales would push its earnings beyond expectations. On the other hand, Amazon’s e-commerce dominance and its growing AWS segment had investors hoping for another quarter of strong revenue growth.
Another interesting development came from the toy manufacturer Hasbro (HAS). Bank of America Global Research upgraded Hasbro shares from “Neutral” to “Buy” based on its recent product launches, including the popular Lord of the Rings Magic set. This positive sentiment pushed the stock price up by 3% ahead of Thursday’s earnings announcement.
Today’s economic news was dominated by anticipation of the upcoming nonfarm-payrolls report, due on Friday. Given the recent fluctuations in job numbers, a positive report could boost market confidence in the resilience of job growth. There is also the hope that strong job growth could alleviate some of the inflationary pressures currently facing the economy.
Adding to the economic intrigue, Florida Governor Ron DeSantis proposed to strip the Federal Reserve of its employment mandate. While this proposal created a stir, the more unusual aspect was the striking similarity between DeSantis’s proposal and some of the economic policies currently pursued by President Joe Biden. This unexpected alignment of viewpoints underscored the ongoing debates about the most effective strategies for managing the nation’s economy.
In the recent wrap-up of last week’s market action, analyst Mary Ellen McGonagle gave an insightful review. You need to note that the markets have been moving higher with discernable sector rotations. Analyzing the relative strengths can help you identify the best sectors to participate in. For instance, the mega-cap names have been performing impressively with robust earnings reports, presenting viable investment opportunities. Observing headline news is also crucial as it significantly affects price action.
On the economic front, the 2.4% GDP growth for Q2 was surprisingly high, exceeding the expected 2% level. This, coupled with the FOMC’s decision to raise interest rates by a quarter of a percent, led to a spike in interest rates. Interestingly, the FOMC remained uncertain about future policy directions, meaning investors will scrutinize every economic data point for potential Fed responses. The markets took a slight hit last Thursday due to this uncertainty, but they managed to recover as consumer confidence climbed to a two-year high and inflation data indicated a cooling trend.
As you move forward, pay close attention to key metrics like employment data, set for release next week, and keep tabs on major companies’ earnings. Names like Amazon and Apple are lined up to report, which might significantly affect market trends. Also, consider the recent strong performance of Communication Services, which had a 5% uptick last week, largely driven by the earnings of big names like Alphabet and Meta. On the flip side, the real estate sector saw a bit of a pullback, a trend worth watching. The markets are in a confirmed uptrend as of now, with both the S&P 500 and the NASDAQ exhibiting positive momentum.
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In today’s financial market activity, the NASDAQ Composite Index advanced slightly, reaching 14,346.02—a modest 0.21% increase, underlining the resilience of the technology sector. The S&P 500 Index followed suit, posting a minor gain of 0.15% to settle at 4,588.96, reflecting a calm but positive market sentiment.
In parallel, the Global Dow Realtime USD index inched up by 0.17% to end the day at 4,257.15, echoing the positive momentum. Additionally, the Gold Continuous Contract registered a modest increase of 0.20% to $2,003.80, indicating a steady demand for traditional safe havens.
Crude Oil WTI presented the most significant shift, posting a robust 1.56% rise to close at $81.84 per barrel, highlighting the ongoing energy market dynamics.
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