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Wednesday, July 2

Noteworthy macro moves today: GBP/USD -1.0%. Noteworthy US mega-cap moves today: UnitedHealth Group Inc (UNH) -1.9%. 

The U.S. labor market data has shown signs of deterioration, with private businesses shedding 33,000 jobs in June according to ADP—marking the first decline since March 2023 and significantly below expectations for a gain of 95,000 jobs. This follows an upward revision to May's job losses from previously reported figures. The mixed signals regarding employment are contributing to uncertainty about future Federal Reserve policy decisions.

In Europe, economic indicators reveal that unemployment rates have risen slightly across several countries; notably, Italy’s rate surged unexpectedly to its highest level in nearly a year at 6.5%. Meanwhile, France's budget deficit narrowed compared to last year's levels as revenues increased while expenditures decreased—a development reflecting fiscal improvements amid broader regional challenges.

Market sentiment is also influenced by ongoing political developments surrounding President Trump's tax-and-spending bill which recently passed through the Senate but faces scrutiny over potential impacts on national debt and inflation risks due to proposed tariffs set for July deadlines against Japan and other nations. These factors contribute further complexity as investors await key upcoming reports including ADP Employment Change data today followed closely by Nonfarm Payrolls tomorrow.

iShares MSCI United Kingdom ETF (EWU) [-1.4%]
The iShares MSCI United Kingdom ETF (EWU) has experienced a decline of 0.9% since Tuesday. This drop coincides with the UK government's passage of a diluted welfare reform bill, which has heightened economic uncertainty and contributed to a decrease in the value of sterling against the US dollar. Additionally, concerns regarding potential higher tariffs on Japan proposed by President Trump are affecting trade relations, which may have implications for British companies represented in EWU. The GBP/USD currency pair has also declined, further impacting the ETF's performance. Notably, significant contributors to the ETF's downturn include RELX, NGG, AZN, LYG, and UL, all of which have posted negative returns.

VanEck Semiconductor ETF (SMH) [-0.7%]
In pre-market trading on Wednesday, the VanEck Semiconductor ETF (SMH) has seen a decline of 0.7% since Tuesday. Recent social media discussions highlight the passage of a significant bill by the House, which includes new tax credits and grants aimed at boosting domestic chip manufacturing, a development viewed positively for the semiconductor sector. Additionally, there has been notable sentiment around semiconductors, with comparisons made to gold and references to a substantial increase following a recent technical indicator crossover. Among SMH's holdings, major contributors to the ETF's performance have shown declines, with NVDA, LRCX, KLAC, AMAT, and INTC all experiencing negative returns. Furthermore, the Nasdaq 100 Index has also dipped slightly, reflecting broader market sentiment that may be impacting SMH's performance.

CNC | -30.4% | -6.4B
Centene Corp | Managed Health Care
Centene Corp has seen a significant decline in its stock price following the withdrawal of its 2025 earnings guidance. This decision stemmed from preliminary data from the independent actuarial firm Wakely, revealing lower than expected market growth and higher morbidity rates in 22 of its 29 marketplace states. The company now estimates a reduction in net risk adjustment revenue transfer expectations by approximately $1.8 billion, translating to an adjusted earnings impact of around $2.75 per share. In response, major financial institutions have downgraded their ratings on Centene, with JPMorgan reducing its target price from 75 to 48 and UBS from 80 to 45. As of this morning, Centene shares are reported at 56.65, reflecting a notable drop since the previous trading day.

AAPL | +1.3% | +42.6B
Apple Inc | Technology Hardware, Storage & Peripherals
Apple Inc. is experiencing a price increase, aligning with the upward movement in the Technology Hardware, Storage & Peripherals sector. The company's original film "F1" has achieved notable box-office success, generating approximately $144 million globally, with $55.6 million from the U.S. and Canada alone. IMAX screenings accounted for nearly 23% of domestic sales, exceeding initial projections. Despite this success, Apple faces challenges in replicating such results without IMAX. Year-to-date, the stock has seen a decline. On social media, Jefferies upgraded Apple to a "Hold" rating from "Underperform," raising the target price to 188.32 from 170.62, citing strong iPhone sales. Discussions also highlight early prototyping of a foldable iPhone for a 2026 launch, while concerns linger about revenue growth, with some labeling Apple a "Sleeping Giant."

BABA | -1.8% | -39.9B
Alibaba Group Holding Ltd | Broadline Retail
Alibaba Group Holding Ltd has announced a significant expansion of its cloud services, launching its third data center in Malaysia and planning a second in the Philippines by October. The company is investing approximately 52 billion dollars in AI and cloud infrastructure over the next three years. Additionally, Alibaba is offering 50 billion yuan (around 6.98 billion dollars) in coupons and vouchers to enhance its delivery and e-commerce platforms amid intense competition in China. Despite a recent surge in stock price, Alibaba faces challenges, including a missed revenue target of 33.08 billion dollars for the fourth quarter. Social media discussions highlight the company's commitment to cloud and AI services, with mentions of an AI-focused global competency center in Singapore and intentions to expand its cloud business into various regions, backed by a substantial investment in AI.

UNH | -1.6% | -4.6B
UnitedHealth Group Inc | Managed Health Care
UnitedHealth Group Inc (UNH) has experienced a decline of 1.6% since Tuesday. Social media discussions on October 23rd noted that UNH was down in after-hours trading, which users attributed to Centene Corporation's (CNC) withdrawal of guidance for 2025, citing lower-than-expected market growth and increased medical costs in its Medicaid business. This significant decline in CNC's stock, by over 26%, appears to be influencing market sentiment towards UNH. Earlier that day, UNH had seen a notable increase of 5%, interpreted by some as a strong buy signal. However, later discussions highlighted active selling in after-hours trading, reflecting mixed sentiment amid the volatility surrounding healthcare stocks.

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