July 25th Market Overview

July 25th Market Overview (no fluff)

Author

J.L. Bernstein
July 25, 2024

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Happy Thursday everyone! Sorry today is slightly brief, tomorrow is my birthday!

Lets dig in…

Executive Summary

  1. U.S. stocks rebound: Major indexes climb despite yesterday’s tech sell-off with S&P 500, Nasdaq Composite, and Dow Jones Industrial Average posting gains until going even into close.

  2. GDP growth surprises: U.S. GDP for Q2 expands by 2.8%, surpassing the 2% estimate, suggesting economic resilience.

  3. Rate cut expectations rise: Odds of a 25-basis-point cut by the Federal Reserve in September increase to 85.8%.

  4. Notable stock movements: Megacap stocks attempt to recover while Ford and Edwards Lifesciences face significant declines.

Market Overview

  • S&P 500: Up 0.59% to 5,458.94 going slightly red into close

  • Nasdaq Composite: Up 0.57% to 17,445.55 going slightly red into close

  • Dow Jones Industrial Average: Up 0.90% to 40,211.24

  • Russell 2000: Small-cap index jumps 2.3%, nearly recouping Wednesday’s losses

  • S&P Small Cap 600: Rises by 2.2%

Key Market Drivers

  • GDP Growth: U.S. GDP expanded by 2.8% in Q2, outpacing the anticipated 2%, indicating a strong economy.

  • Inflation Trends: Signs of subsiding inflation with investors anticipating Personal Consumption Expenditures (PCE) price data due on Friday.

  • Federal Reserve Outlook: Investors now expect a 25-basis-point rate cut by September, with at least two cuts by December.

Stock Spotlight

  1. Tesla: Saw a 4.5% rise as it continues to gain investor confidence.

  2. IBM: Climbed 5.8% on strong earnings and an upgraded revenue forecast.

  3. American Airlines: Up 4.1% despite cutting its annual profit forecast.

  4. Southwest Airlines: Surged 6.8% thanks to announced strategic changes.

  5. Ford: Plummeted 17.3% after missing profit estimates, highlighting its struggles.

Other Magnificent 7 Updates

  • Amazon, Apple, and Nvidia: Each rose between 0.8% and 1.2%, collectively contributing to the market’s recovery.

  • Alphabet: Bucked the trend, sliding 0.8%.

Other Notable Company News

  • Old Dominion: Increased 6%, reflecting investor optimism.

  • J B Hunt: Rallied 6.4%, propelled by sector-wide gains in transportation.

  • Edwards Lifesciences: Tumbled 29.6% on disappointing revenue numbers.

Sector Watch

  • Transportation: Robust performance with Dow Jones Transportation Average up 2.5%.

  • Small-Cap Stocks: Strong rotation towards smaller-cap stocks, driven by value investors.

Bond Market

  • Policy Shift Expectations: Increased speculation of reduced bond buying and possible rate hikes, particularly impacting Japanese markets.

Policy Watch

  • Interest Rate Dynamics: Federal Reserve now anticipated to cut rates further, with increased probability of cuts by December. Closely monitoring FOMC meetings for further insights.

    - JB

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Note: This newsletter is intended for informational purposes only.