Market Review 23rd July 2024
Simplify the craziness
DAILY REVIEW
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2 min read
A Day of Balance and Earnings
On July 23, 2024, the stock market experienced a day of relative calm after recent volatility. The S&P 500 closed slightly lower, dipping 0.2%, while the Dow Jones and Nasdaq each slipped about 0.1%. Investors split their attention between the ongoing U.S. political developments and a flurry of quarterly earnings announcements, resulting in modest market movements.
Key Earnings Highlights
The earnings season is in full swing, and Tuesday saw significant reports from major companies. General Motors (GM) beat profit expectations, while UPS missed consensus estimates. Despite the mixed results, shipping volumes for UPS indicated sustained consumer activity in the U.S. The spotlight, however, was on Alphabet (Google) and Tesla, both of which reported their earnings after the market closed.
Spotify: Shares jumped following its second consecutive quarterly profit.
General Motors: Despite raising its earnings outlook, GM's stock fell.
UPS: Shares slid after reporting a drop in earnings and lowering its outlook.
Market Reaction and Sector Performance
Tech stocks have been particularly volatile, with a rotation into small-cap stocks amid expectations of impending interest rate cuts by the Federal Reserve. The Russell 2000 index, which tracks small-cap companies, outperformed, rising more than 1% on Tuesday.
Decliners:
UPS: Plunged 12.1% due to disappointing earnings and lowered guidance.
Paccar: Dropped 11.0% following lower-than-expected profits.
A.O. Smith: Fell 9.4% despite meeting EPS expectations.
Advancers:
Pentair: Jumped 9.0% after surpassing sales and EPS estimates and raising its guidance.
MSCI: Soared 7.9% on strong recurring subscription revenue.
Sherwin-Williams: Gained 6.9% following strong earnings and an upward revision of profit guidance.
Economic Indicators and Future Outlook
The market's current performance reflects an evolving economic outlook and the implications of the upcoming U.S. elections. Despite the political uncertainty, solid corporate earnings and expectations of Fed rate cuts have kept the market relatively stable.
Home Sales: Fell faster than anticipated in June as buyers shied away from high prices and mortgage rates.
Treasury Yields: The 10-year yield edged down to around 4.24% after three consecutive sessions of increases.
Commodities: Crude oil declined by about 1.3%, while copper futures are experiencing their longest losing streak since 2020.
What to Watch
Investors are keeping a close eye on upcoming economic data, including the second-quarter GDP and June's inflation numbers, which are expected to provide crucial insights into the Fed's next moves. Additionally, earnings reports from mega-cap companies like Tesla and Alphabet will likely set the tone for the markets in the coming weeks.
In summary, while the market saw modest declines on Tuesday, the overall sentiment remains cautiously optimistic. Solid corporate earnings and the prospect of Fed rate cuts provide a supportive backdrop for equities, even as political and economic uncertainties loom.
