Last Updated 4:05 PM EST
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Stock indices finished today’s trading session in the green as the recent rally continues. The Nasdaq 100 (NDX), the S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) gained 0.73%, 0.28%, and 0.08%, respectively. The real estate sector (XLRE) was the session’s laggard, as it fell 0.72%. Conversely, the materials sector (XLB) was the session’s leader, with a gain of 1.74%.
Furthermore, the U.S. 10-Year Treasury yield increased to 3.88%, whereas the Two-Year Treasury decreased to 4.87%. This brings the spread between them to -99 basis points.
Compared to yesterday, the market is pricing in a higher chance of a higher Fed Funds rate for December 2023. In fact, the market’s expectations for a rate in the range of 5.5% to 5.75% increased to 29.9% compared to yesterday’s expectations of 28.5%.
Last updated: 2:55PM EST
Stocks are in the green so far in today’s trading session. Although investors continue to cheer on this bull market, BlackRock (NYSE:BLK) and Franklin Templeton (NYSE:BEN) issued some words of caution. As several central banks prepare to announce policy decisions this week, BlackRock anticipates the Federal Reserve and others will maintain relatively high-interest rates in the short term, contradicting some market expectations of upcoming cuts.
BlackRock suggested that despite market expectations for rate cuts spurred by easing inflation, central banks will likely hold their ground. They expect the Federal Reserve and the European Central Bank to raise rates again this week, while they predict the Bank of Japan will maintain a loose policy to encourage inflation. BlackRock also voiced its support for US inflation-linked bonds, citing an underestimation of inflation’s persistence.
Meanwhile, investment firm Franklin Templeton Investments advises caution despite the ongoing upward trend of major market averages in H2 2023. The firm expressed concerns about the potential pitfalls of following the current bull markets too closely, highlighting the risk of mistiming investments. It noted that asset prices suggest cyclical growth will not only persist but accelerate above the trend in the coming months.
However, Franklin Templeton believes even optimistic macro forecasts should account for positive but below-trend growth, allowing inflation to continue its slow normalization. Consequently, the firm advocates a defensive position for multi-asset portfolios, currently favoring fixed income over equities.
Last updated: 11:55AM EST
On Tuesday, the Conference Board released its Consumer Confidence report, which, as the name suggests, measures the consumers’ confidence in the economy. This report is believed to be a leading indicator for spending patterns as optimistic consumers are more likely to spend as opposed to pessimistic ones. For July, consumer confidence came in at 117, which was higher than expectations of 111.8. This was also higher than last month’s reading of 110.1.
Furthermore, Standard & Poor’s released its United States S&P/Case-Shiller House Price Index Composite – 20 n.s.a. This report measures the change in house prices in 20 metropolitan areas. On a year-over-year basis, home prices decreased by -1.7% in May, higher than the expected -2.2%. However, prices increased by 1.5% on a month-over-month basis. This is on top of the previous month’s increase of 1.7%.
Last updated: 9:30AM EST
As big tech companies, including Alphabet (GOOGL) and Microsoft (MSFT), get set to announce their earnings today post-market close, stocks were mixed at open with the Nasdaq 100 (NDX) up by 0.35% while the S&P 500 (SPX) and the Dow Jones Industrial Average (DJIA) were down by 0.03%, and 0.08%, respectively.
Meanwhile, the S&P Corelogic Case-Shiller index indicated that home prices increased less than expected in May, with the HPI Composite for 20 cities rising by 1% in May. For reference, economists were looking for an increase of 1.5%.
First published: 4:14AM EST
U.S. Futures are trading mixed this morning as excitement builds up for the big tech earnings release today. The Dow continued yesterday, with its eleventh straight day of gain and the longest since 2017. The index also marked its highest level since April 2022. Futures on the Nasdaq 100 (NDX) and the S&P 500 (SPX) are up by 0.15%, and 0.01%, respectively, while those on the Dow Jones Industrial Average (DJIA) are down by 0.08%, at 4:00 a.m., EST, July 25.
Alphabet (GOOGL) and Microsoft (MSFT) are set to report their quarterly results today, after the bell. Traders’ sentiment towards AI and the tech sector in general has helped lift stock prices and expectations for tech stocks this year. Overall, Wall Street expects tech companies to post strong outperformance this quarter. Also reporting today are legacy automaker General Motors (GM), music app Spotify (SPOT), social media app SNAP (SNAP), and pharma giant Biogen (BIIB), among others.
Meanwhile, the two-day monetary policy meeting kicks off today. At the culmination of the FOMC meeting on July 26, the Fed will release its interest rate decision, followed by Chair Jerome Powell’s speech. Markets largely expect a 25 basis point hike from the Fed this time after it went for an unexpected interest rate pause in June’s meeting. In the meantime, the benchmark crude WTI futures are trading above the $79 level as demand for oil and gas remains hot amid supply shortages.
Turning towards the economic calendar, the all-important Consumer Confidence Index is due today. Experts will gauge the index to understand American consumers’ mindsets about their personal finances and the economy as a whole. An optimistic consumer will spend more despite the tough macro background and display resilience. The CCI is one of the indicators that help the Fed form its monetary policy.
Elsewhere, European indices are trading mixed this morning, amid a slew of economic data points and corporate earnings releases. Markets also await the European Central Bank’s (ECB) monetary policy decision on Thursday, with a 25-basis-point rate hike expected.
Asia-Pacific Markets Mostly End Higher
A majority of Asia-Pacific indices finished in the green on Tuesday. On the mainland, Chinese property stocks are pacing higher after the government vowed to provide more support to stabilize the economy. The Chinese economy is faltering, with Q2 GDP growing a mere 6.3% from a year ago, lower than the 7.3% expected. The Chinese government said that it would initiate measures to ramp up domestic demand as well as “adjust and optimize” its property policy to bolster the overall economy.
Hong Kong’s Hang Seng index and China’s Shanghai Composite and Shenzhen Component indices finished higher by 4.08%, 2.13%, and 2.54%, respectively.
On the other hand, Japan’s Nikkei bucked the trend and ended lower by 0.05%, while the Topix index ended up by 0.18%.
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