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Stock Market Today – Monday, July 25: What You Need to Know
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Stock Market Today – Monday, July 25: What You Need to Know

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Stocks finished Monday’s session with mixed results as it marks the beginning of an action-packed week of major earnings releases and the Fed’s July meeting. In addition, prices at the pump continue to fall while natural gas prices continue to rise.

Stocks Finish Monday’s Trading Session with Mixed Results

Last Updated 4:20PM EST

Stock indices finished today’s trading session with mixed results. The Nasdaq 100 fell 0.55%, while the S&P 500 and the Dow Jones Industrial Average gained 0.13% and 0.28%, respectively.

The consumer discretionary sector (XLY) was the session’s laggard, as it decreased by 0.83%. Conversely, the energy sector led the entire day, finishing with a gain of 3.7%. In addition, WTI crude oil gained almost 2%, hovering around the high-$96 per barrel range. It is currently near the session high of $96.92 per barrel.

Furthermore, the U.S. 10-Year Treasury yield increased to 2.81%, a gain of more than five basis points. Similarly, the Two-Year Treasury yield also increased, as it hovers around 3.02%. This brings the spread between them to -21 basis points. The negative spread indicates that investors still have fears of a recession.

Compared to Friday, the market is pricing in a higher chance of a higher Fed Funds rate for the end of the year. In fact, the market’s expectations for a rate in the range of 3.75% to 4% increased to 10.7%, which is up from last Friday’s expectations of 7.1%. In addition, the market is now also assigning a 32.1% probability to a range of 3.5% to 3.75%. For reference, investors had assigned a 27.5% chance on Friday.

Gazprom Set to Further Decrease Natural Gas Supply to Europe

Last Updated 3:00PM EST

Stocks are negative heading into the final hour of today’s trading session. As of 3:00 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.1%, 0.3%, and 1.1%, respectively.

The technology sector is the laggard so far, as it is down 1%. Conversely, the energy sector is the session’s leader, with a gain of 3.6%.

Prices of natural gas rose on Monday after Russia’s Gazprom announced it would further reduce the flow into Europe by half. Since gas flows are already at 40% capacity, this would equate to a capacity of 20%.

Gazprom states that the reason for the reduction is the result of the maintenance of gas turbines. However, this is more likely a move to put political pressure on European nations that have sanctioned Russia. In addition, there are fears that Russia will stop gas flows completely, which would be a very stressful situation for Europe once winter arrives.

Because of this, the European Union is working on a plan to conserve gas. However, a plan has yet to be agreed upon, as not all countries are equally reliant on Russian gas.

Prices at the Pump Continue to Decline

Last Updated 12:15PM EST

Stock indices are mixed halfway into today’s trading session. As of 12:15 p.m. EST, the Nasdaq 100 and the S&P 500 are down 0.6% and 0.01%, respectively. Meanwhile, the Dow Jones Industrial Average is up 0.1%.

WTI crude oil is currently hovering around $96 per barrel, as it trades not too far away from its session high of $96.84 per barrel. The price has pulled back considerably from last week’s high of $104.44 per barrel.

Consumers will be happy to see that the commodity’s continued downtrend has led to lower gas prices across the country. The national average for regular gas was last $4.355 per gallon, down from yesterday’s reading of $4.366. This is significantly lower than the all-time high of $5.016 per gallon on June 14.

The highest price can be found in California, where prices are substantially higher than the national average, at $5.732 per gallon. On the other hand, Texas is the state with the lowest gas price, at $3.855 per gallon.

It’s likely that this downward trend will continue going forward as the Federal Reserve looks to raise interest rates to fight inflation. However, higher rates will destroy demand throughout the whole economy. As a result, lower gas prices might have to come at the cost of a recession.

Stocks are Mixed to Start Monday’s Trading Session

Last Updated 10:00AM EST

Stock indices are mixed 30 minutes into today’s trading session. As of 10:00 a.m. EST, the Nasdaq 100 is down 0.2%, while the S&P 500 and the Dow Jones Industrial Average are up 0.2% and 0.3%, respectively.

The technology sector (XLK) is the laggard so far, as it is down 0.6%. Conversely, the energy sector (XLE) is the session’s leader, with a gain of 1.4%.

WTI crude oil remains below $100 per barrel as demand for gasoline remains lower than pre-pandemic levels, resulting from high prices at the pump. However, physical markets remain undersupplied. As a result, the price is hovering around the mid-$95 per barrel range, up roughly 0.6% from the previous close.

Meanwhile, bond yields are higher, as the U.S. 10-Year Treasury yield is now hovering around 2.82%. This represents an increase of more than seven basis points from the previous close.

Similar movements can be seen with the Two-Year yield, which is now at 3.02%. However, the spread between the 10-Year and Two-Year U.S. Treasury yields is still negative, currently sitting at -20 basis points.

Pre-Market Update

U.S. equity futures moved higher early Monday morning before the busiest week of this earnings season commences. Investors are poring over the earnings commentary from companies’ management to better understand how they are handling the economic pressures, and how they plan to navigate through the second half of the year.

Futures on the Dow Jones Industrial Average (DJIA) gained 0.40%, while those on the S&P 500 (SPX) moved 0.43% higher, as of  6.12 a.m. EST, Monday. Meanwhile, the Nasdaq 100 (NDX) futures advanced by 0.49%.

This week holds major earnings releases from the likes of Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), and Microsoft (MSFT).

Weaker-than-expected earnings and outlook from social media player Snap (SNAP) hung heavy on tech stocks on Friday. The Dow closed 0.43% lower on Friday, while the S&P 500 and the Nasdaq 100 ended the day with losses of 0.93% and 1.77%, respectively.

Nonetheless, the week ended in green for the three major averages, with the Dow, S&P 500, and Nasdaq 100 gaining 2%, 2.6%, and 3.3%, respectively.

Of all the S&P 500 companies that reported earnings up until Friday, about 70% surpassed Street expectations, according to FactSet.

Also keeping investors at the edge of their seats this week is the most awaited update from the Federal Reserve — the July interest rate hike. A Reuters poll found that about 96% of respondent economists expect a 75 basis point hike this month. However, a survey by Bloomberg revealed that several economists expect the Fed to slow down the pace of policy tightening after the 75 basis point hike in July.

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