July 29th Market Overview

July 29th Market Overview (no fluff)

Author

J.L. Bernstein
July 29, 2024

Happy Monday everyone, thank you for all the birthday wishes. A lot of news impacting the markets this week but its still early to speculate much.

Lets dig in…

Executive Summary

  • S&P 500 and Nasdaq aim green into close. We are down only -17.25 (-3.58%) the past monthon the QQQ now… not too shabby.

  • Federal Reserve meeting takes center stage, with potential hints at a September rate cut.

  • Apple hits a snag with AI features, possibly impacting the new iPhone launch.

  • Mixed bag in earnings: McDonald’s and Dexcom reports stir the market.

Market Overview

The S&P 500 and Nasdaq are shaking off last week’s losses, gearing up for a green close. . Investors have their sights set on this week’s Federal Reserve meeting, which could signal a rate cut in September, and a slew of earnings reports from tech heavyweights.

Key Market Drivers

  • Earnings Season: Tech giants Amazon, Apple, Meta, and Microsoft step into the earnings spotlight this week.

  • Consumer Spending: Rising prices and tightened wallets pose challenges for fast food and retail sectors.

  • Federal Reserve Meeting: All eyes on the Fed this Wednesday for clues about a potential September rate cut.

Stock Spotlight

Amazon (AMZN)

  • Amazon’s riding high, trading above its 21-week moving average after holding the breakout from 2021 highs at $178. Bullish sentiment is evident in strong call options at $190-$200. Waiting for ER for more commentary…

CrowdStrike (CRWD)

  • CRWD’s pullback saw lower trading volume but held support at $250. Traders seem to be limiting downside expectations, with put deltas drying up below $250. Sentiment is on the upswing, reflected in a higher skew.

Microsoft (MSFT)

  • Microsoft edged up in premarket trading after bouncing off its 30-week moving average last Friday. However, the lowering skew suggests dampened sentiment ahead of its earnings report.

Dexcom (DXCM)

  • Dexcom’s skew took a nosedive before earnings but rebounded afterward. This shift suggests traders are eyeing a potential buying opportunity, with positioning leaning towards calls.

McDonald’s (MCD)

  • The Golden Arches hit a bump, missing both earnings and revenue expectations. Executives acknowledge that high prices might be turning some diners away and are taking a hard look at their pricing strategy.

Other Magnificent 7 Updates

  • Apple (AAPL): Delayed some AI features to iron out bugs, potentially disrupting the new iPhone rollout. Long-term outlook remains bright with robust AI integration planned for newer models.

  • Meta (META): Set to report earnings this week, with investors keen on digital advertising performance.

  • Amazon (AMZN): Maintains positive momentum with strong call option activity backing up bullish expectations.

Other Notable Company News

  • Abbott (ABT): Shares down 5% following a hefty $495 million verdict over baby formula safety concerns.

  • 3M (MMM): Gets a boost from Deutsche Bank’s upgrade and new price targets after a solid quarter.

  • Ford (F): Takes a hit from disappointing earnings and loses its spot on Morgan Stanley’s top pick list.

  • Tesla (TSLA): Climbs to the top of Morgan Stanley’s picks in the U.S. auto sector.

Sector Watch

  • Homebuilding (XHB): Bullish sentiment holds strong, with call deltas still pointing to higher targets.

  • Consumer Staples (XLP): Breaks through resistance at 78, now eyeing the 80 mark.

  • Tech (QQQ): Under pressure but expected to bounce back, potentially aligning more closely with BTC performance.

Bond Market

  • U.S. Treasury yields eased, with the 10-year yield settling just under 4.2% as of Friday, reflecting a cautious market stance amid current economic conditions.

Policy Watch

  • Federal Reserve: FOMC meeting on Tuesday and Wed. Hints of a potential rate cut in September, especially given recent positive inflation data and cooling labor market conditions.

  • Bank of Japan and Bank of England: Both central banks are set to meet this week. While details are limited, their decisions could sway global market sentiment. Further details later this week if we see something significant

    - JB

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