July 2nd Market Overview

Market brief for July 2nd, 2024 (no fluff)

Author

J.L. Bernstein
July 02, 2024

A quick overview of the 2nd day to this short trading week…lets dive in.

SPY currently at: $547
QQQ currently at: $486

Executive Summary

  1. US markets are facing downward pressure, influenced by weakness in European markets, particularly in retail sectors.

  2. Eurozone inflation remains a focal point, with June’s rate at 2.5% and core inflation hotter than expected at 2.9%.

  3. Tech giants show mixed signals: Tesla reports weak China deliveries, while Amazon sees positive projections for its international unit.

  4. Oil prices are up 0.7%, with traders showing interest in WTI futures contracts.

Market Overview

US markets were trending lower in pre-market trading, echoing weakness seen in European markets. The S&P 500, which closed yesterday at 5473, is now trading at 5448, below the heavy volume shelf of 5450 . The Nasdaq has declined from 19,800 to 19,686. This downturn is largely attributed to struggles in European markets, with Germany’s DAX down 1.5% and France’s CAC giving back recent gains. In contrast, Asian markets are showing resilience, with Japan and Hong Kong leading gains. Since pre-market we’ve seen a strong trend upwards throughout the day. As election time gets closer, this kangaroo price action might become more common.

Key Market Drivers

  • Eurozone inflation: June inflation at 2.5%, core inflation higher than expected at 2.9%

  • European market weakness, particularly in retail sectors

  • Oil price increase of 0.7%, with active trading in WTI futures

  • Anticipated JOLTS report and Fed Chair Powell’s speech later today

Stock Spotlight

  1. Tesla (TSLA): China delivery numbers down 2% MOM and 24% YOY, raising concerns given China’s importance to the EV market

  2. Amazon (AMZN): Maintained as top pick by Mizuho with $240 PT. International unit projected to turn profitable, a stark turnaround from last year’s losses

  3. Microsoft (MSFT): Announced enhanced cybersecurity collaboration with IBM, strengthening its position in cloud security

  4. Nvidia (NVDA): Facing potential charges from French antitrust regulators for alleged anti-competitive practices

Other Magnificent 7 Updates

  • PayPal (PYPL): Up in premarket as Susquehanna upgrades to positive with $71 PT, citing a constructive outlook and focus on profitable growth

  • Apple (AAPL): No significant updates provided

Other Notable Company News

  • Spotify (SPOT): BoA reiterates buy rating, raises PT to $380, reflecting optimism for Q2 results and path to positive revenues and margins

  • Salesforce (CRM): Investors voted against executive compensation plan

  • Qualcomm (QCOM): Became new front-of-shirt sponsor for Manchester United

Bond Market

The bond market remains attentive to inflation data and central bank commentary from today. Bonds really have not been performing well on 5 year and 1 year charts. $TLT (iShares 20+ Year Treasury Bond ETF) as an example.

The ETF is down around 8.5% since the start of the year…. yikes

Policy Watch

  • ECB officials, including President Lagarde, stress the need for continued monitoring of inflation before making policy changes

  • Fed’s Goolsbee notes warning signs in the jobs market, while Williams expresses confidence in the path to 2% inflation

  • Ongoing discussions about drug pricing, with the Biden administration targeting Novo Nordisk’s Wegovy

*This newsletter is for informational purposes only. Always conduct your own research and consult with a financial advisor before making investment decisions.