Wall Street ended the day without any real trend after swinging between green and red for over six hours. In the end, the Nasdaq Composite Index rose 0.1% (initially up to +0.8%), the S&P 500 also rose, while the Dow Jones Industrial Average fell -0.1%.
The Nasdaq 100 index rose 0.2% on the back of ON Semiconductor up 15.5%, Tesla up 5.6% (JP Morgan has a positive view), Dexcom up 5.4% (up -42% last week), Charter.com up 2.6%… and Alphabet up 1.5%, making it the only GAFAM to post a rise of more than 0.3% on Monday.
The Nasdaq Composite Index has fallen about 7% since its July 10 peak, and the seven tech giants that have been major contributors to Wall Street’s rally over the past year and a half — Nvidia is down 1.3% — have fallen more than 12%.
This week is set to be the busiest of earnings season, with a total of 171 companies reporting results across the S&P 500. So far, 78% of U.S. companies that have reported earnings have beaten analyst expectations in profits, up from an average of 74% over the past 10 years.
Microsoft, Meta, Amazon and Apple – which make up about 20% of the S&P’s composition and are mostly held by institutional investors – are due to report earnings this week, but any disappointment could lead to further selling, as happened with Alphabet last week.
The dollar’s strength is a reminder of the tense geopolitical situation in the Middle East, with President Emmanuel Macron calling on Israel and Lebanon to “avoid escalation.” Peace appears to be at risk, with many countries, including France, calling on their citizens to leave Lebanon, Israel and Palestine as soon as possible.
Beyond geopolitics, summer is traditionally a time when the future of the global economy is called into question, with renewed concerns about China and questions resurfacing about the rally in tech stocks.
Wall Street is not feeling too nervous ahead of the Federal Reserve’s monetary policy meetings on Tuesday and Wednesday. No interest rate changes are expected on Wednesday, but experts are hoping Chairman Jerome Powell will pave the way for a possible rate cut in September.
The US bond market started the week on a strong note with “2034” bonds rising -2.8 basis points to 4.172% while “2-year” bonds finished unchanged. Note: US federal debt passed the $35 trillion mark over the weekend, bringing the total to more than $35.04 trillion.
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