The stock market saw slight declines on Tuesday as the S&P 500 and Nasdaq Composite both edged down slightly, while the Dow Jones Industrial Average also fell modestly. This cautious pullback follows a strong performance the previous day, reflecting investor wariness amid a mix of earnings results, economic data, and political developments in the US.
The stock market saw slight declines on Tuesday as the S&P 500 and Nasdaq Composite both edged down slightly, while the Dow Jones Industrial Average also fell modestly. This cautious pullback follows a strong performance the previous day, reflecting investor wariness amid a mix of earnings results, economic data, and political developments in the US. Despite disappointing reports from companies like UPS and General Motors, the overall earnings season remains robust, with many firms exceeding expectations and bolstering investor confidence.
Key Takeaways:
S&P 500 and Nasdaq Composite Slightly Lower: The S&P 500 dipped 0.16% to close at 5,555.74, while the Nasdaq Composite inched down 0.06% to finish at 17,997.35. These minor declines came after a strong performance the previous day. This reflects the market's sensitivity to upcoming earnings and economic data, underscoring the delicate balance investors are maintaining.
Dow Jones Industrial Average Drops: The Dow Jones Industrial Average fell by 57.35 points, or 0.14%, closing at 40,358.09. This decline occurred as Wall Street continued to digest second-quarter earnings reports and economic indicators. Despite the dip, the Dow's performance illustrates a broader investor hesitancy amid ongoing assessments of corporate earnings, economic data, and political developments.
European Markets Edge Higher: European stocks closed slightly higher as investors evaluated the latest earnings reports from regional companies. The pan-European Stoxx 600 index increased by 0.13%, driven by a 1.4% gain in tech stocks, despite a 1.71% decline in mining stocks. The FTSE 100 Index and CAC 40 both closed lower, down 0.38% and 0.31%, respectively. Notable movements included Porsche shares falling 5% after cutting its 2024 outlook due to a shortage of special aluminium alloys, and Hungary’s central bank continuing its easing cycle by cutting its benchmark interest rate by 0.25 percentage points to 6.75%.
Asia-Pacific Markets Mixed: Asia-Pacific markets displayed mixed performances on Tuesday. China's CSI 300 led the declines, falling 2.14% to close at 3,439.88, driven by investor concerns over political uncertainty and economic data. India’s Nifty 50 and BSE Sensex both dropped nearly 0.8% following the announcement of a new budget that lowered the fiscal deficit target. Meanwhile, Japan's Nikkei 225 slipped 0.01% to 39,594.39, and the broader Topix advanced 0.21% to 2,833.39. Taiwan’s Taiex kicked the trend, rising 2.76% to 22,871.84, breaking a four-day losing streak with gains led by real estate, industrials, and tech sectors.
Home Sales Drop in June: Sales of previously owned homes fell by 5.4% in June compared to May, reaching a seasonally adjusted annualised rate of 3.89 million units. This is the slowest sales pace since December, with sales also down 5.4% year-over-year. The inventory of homes for sale jumped 23.4% from a year ago to 1.32 million units, marking the highest supply since May 2020. Despite increased inventory, the median price of existing homes sold in June rose to $426,900, a 4.1% year-over-year increase and an all-time high for the second consecutive month. This price increase is partly attributed to stronger sales in the higher-end market, while sales in the $250,000 and lower range saw the biggest drop.
Ether ETFs Launch in US: Ether ETFs officially began trading in the US on Tuesday, introducing a new investment vehicle for the world's second-largest cryptocurrency. The ETFs, offered by firms such as BlackRock, Fidelity, and Grayscale, signify a further integration of digital assets into mainstream finance. Despite the launch, the broader crypto market saw declines, with Bitcoin dropping 3% to $65,891.50 and Ether trading at $3,480.27.
Oil Prices Decline: US crude oil futures fell nearly 2% on Tuesday, reaching their lowest level in over a month. The West Texas Intermediate September contract dropped $1.44, or 1.84%, to settle at $76.96 per barrel, while Brent September contract fell $1.39, or 1.69%, to $81.01 per barrel. The declines were influenced by renewed cease-fire negotiations in the Israel-Hamas conflict and concerns over the macroeconomic outlook in China.
FX Today:
USD/JPY Plummets, Eyes Further Downside: The USD/JPY pair dropped to 155.65 after reaching a daily high of 157.10. The path of least resistance appears tilted to the downside, with the first support at the 155.00 figure. A breach of this level could expose the 154.55 level, followed by 151.86. Further losses might drive the pair towards 146.48. Conversely, if buyers manage to lift the exchange rate past 156.33, the next resistance would be at 157.00.
Canadian Dollar Continues Pre-BoC Churn: The Canadian Dollar (CAD) found thin gains across the board on Tuesday, gaining ground against nearly all major currency peers. The USD/CAD pair trades at 1.3776, up 0.14%. Bidders continue to push towards the 1.3800 handle, though resistance near 1.3850 is limiting momentum. A bearish turnaround could drag price action back to 1.3598.
GBP/USD Slips Toward 1.2900: The Pound Sterling extended losses during the North American session, with GBP/USD clinging to the 1.2900 figure after hitting a 7-day high of 1.2887. The pair trades at 1.2906, down 0.21%. Traders are eyeing the next key support level at 1.2860. If market participants push the exchange rate below 1.2900, the 1.2860 and 1.2779 levels will be critical supports. Further downside could target 1.2678. On the flip side, if buyers lift the exchange rate past 1.2940, the next resistance would be at 1.3000.
Gold Prices Rebound: Gold prices saw a modest rebound, with the XAU/USD pair trading up 0.33% at $2,404. The precious metal's movement reflects ongoing investor interest in safe-haven assets amid market uncertainty. To sustain the bullish momentum, gold needs to clear Monday’s high of $2,412, with potential resistance levels at $2,450 and the all-time high of $2,483. Conversely, if the price falls below $2,384, a deeper correction may occur, with support levels at $2,359 and $2,315.
Market Movers:
Tesla Reports Disappointing Earnings: Tesla's stock slid more than 7% in extended trading after reporting weaker-than-expected earnings for the second quarter. Despite a 2% increase in revenue, automotive sales dropped for the second straight period, highlighting challenges in the electric vehicle market.
Alphabet Meets Earnings Expectations but Misses on YouTube Ad Revenue: Alphabet, the parent company of Google, reported second-quarter results that met analyst estimates on overall revenue and earnings. However, it missed expectations for YouTube advertising revenue. Despite this, Alphabet shares fell approximately 2% in after-hours trading.
Spotify Technology Surges on Strong Earnings: Spotify's shares jumped 12% after the music streaming company posted better-than-expected second-quarter earnings. Gross margin and operating income also surpassed expectations, bolstering investor confidence despite softness in monthly active user counts.
United Parcel Service Plunges on Earnings Miss: UPS shares dropped around 12%, hitting a new 52-week low, after reporting $1.79 in earnings per share on $21.80 billion in revenue. Both figures missed analysts’ expectations, which had forecasted $1.99 per share and $22.18 billion in revenue, respectively. This marked UPS’s worst day on record.
Pentair Soars on Earnings and Guidance Upgrade: Pentair’s stock climbed 9%, putting it on pace for a record close, after beating second-quarter earnings expectations. The company reported earnings of $1.22 per share, excluding items, versus the FactSet consensus of $1.14 per share. Revenue also topped estimates, and Pentair raised its full-year guidance.
Inter Parfums Jumps on Record Sales: Inter Parfums' stock surged nearly 9% after the fragrance manufacturer posted record net sales for the second quarter and reaffirmed its full-year earnings and revenue guidance, emphasising steady sell-in and robust sell-out trends.
General Motors Slides on EV Delay: General Motors' stock fell more than 6% after the company announced further delays in its electric vehicle production plans, including a six-month delay in retooling its Michigan electric truck plant. This delay impacts GM's goal of achieving a production capacity of one million EVs in North America by 2025.
As Wall Street prepares for significant earnings reports from tech giants Alphabet and Tesla, the market's cautious stance is shown by the slight declines across major indices, including the S&P 500 and Nasdaq Composite. The mixed performances in European and Asia-Pacific markets, alongside the notable drops in oil prices and the rebound in gold, highlight the complexity of the current economic landscape. The disappointing earnings from some companies contrast with the upbeat results from others like Pentair, reflecting a diverse earnings season where 80% of S&P 500 companies that have reported so far have beaten expectations. This backdrop sets the stage for an intriguing continuation of earnings season, with investor sentiment finely balanced between economic data, corporate performance, and geopolitical developments.
