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Thursday, July 17

Noteworthy macro moves today: Gold -1.0%. US Dollar Index +0.5%. 

Recent economic data from the United States has shown positive trends, with initial jobless claims falling to a three-month low of 221,000 and retail sales increasing by 0.6% in June, surpassing expectations for only a modest gain. These figures reflect ongoing strength in the labor market and consumer spending despite concerns over inflation driven by tariffs.

Political developments have also influenced markets significantly; President Trump's recent comments about potentially firing Federal Reserve Chair Jerome Powell created volatility as fears regarding Fed independence emerged. However, after Trump clarified that he had no immediate plans to dismiss Powell, there was some stabilization in both equity indices and currency values.

In Europe, final consumer price index (CPI) data confirmed an annual rate of 2%, aligning with ECB targets but offering little impetus for policy changes ahead of their next meeting. The UK reported rising unemployment rates at 4.7%, which could lead to speculation around potential interest rate cuts by the Bank of England later this year amid mixed signals on wage growth.

SPDR Gold Shares (GLD) [-0.9%]
Gold prices are under pressure, declining significantly as the U.S. dollar strengthens. This shift follows President Trump's comments denying plans to dismiss Federal Reserve Chairman Jerome Powell, which have reduced expectations for a Federal Reserve rate cut. As of early Asian trade, spot gold was down, while U.S. gold futures also fell. The dollar index increased slightly, making gold more expensive for holders of other currencies. The SPDR Gold Trust reported a rise in holdings. Recent positive U.S. economic indicators, including a drop in initial jobless claims and stronger-than-expected retail sales and manufacturing data, have influenced market dynamics. Additionally, silver prices decreased slightly, reflecting broader market sentiment that may also be impacting GLD, which has seen a decline of 0.9%.

iShares China Large-Cap ETF (FXI) [-0.7%]
The iShares China Large-Cap ETF (FXI) has seen a price decline of 0.7% since Wednesday. Recent geopolitical tensions have emerged as China threatened to block the sale of over 40 ports to BlackRock and MSC unless its shipping giant, Cosco, is granted an equal partnership stake. This situation could impact foreign investment sentiment in China. Concurrently, speculation regarding President Trump's potential dismissal of Federal Reserve Chair Jerome Powell has raised concerns about the Fed's independence, contributing to market volatility. Additionally, China's slowing oil demand growth due to increased electric vehicle sales may affect broader economic conditions relevant to FXI's performance. Among FXI's holdings, TCOM and JD contributed negatively, while LI provided a positive contribution. The AUD/USD currency pair has also declined by 1.03%, reflecting broader market sentiment that may influence FXI.

CSX | +5.3% | +3.6B
CSX Corp | Rail Transportation
CSX Corp's stock price has increased significantly following reports that Union Pacific is considering acquisitions of East Coast carriers, including CSX and Norfolk Southern. This potential merger could alter competitive dynamics in the rail sector. Additionally, CSX announced a quarterly dividend of $0.13 per share, scheduled for payment on September 15, 2025, to shareholders of record by August 29, 2025. This announcement reflects a consistent return to shareholders. After market hours yesterday, a post indicated that Union Pacific had engaged Morgan Stanley to explore acquisition possibilities, contributing to an uptick in after-hours trading for both CSX and Norfolk Southern. Furthermore, CSX is set to announce its Q2 FY2025 earnings on July 23, 2025, with an EPS estimate of $0.42 and a revenue estimate of $3.6 billion.

PEP | +3.1% | +6.0B
PepsiCo Inc | Soft Drinks & Non-alcoholic Beverages
PepsiCo reported its second-quarter earnings, revealing an adjusted EPS of 2.12, surpassing analyst expectations of 2.03. Revenues reached 22.73 billion, exceeding the consensus estimate of 22.29 billion. The Frito-Lay North America segment saw a 1% year-over-year revenue increase, while Beverages North America revenue remained flat. Internationally, net revenue from the International Beverages Franchise increased by 3%. The company raised its full-year 2025 adjusted EPS guidance from 7.92 to 8.04 and projected cash returns to shareholders for 2025 at approximately 8.6 billion. Social media highlighted these earnings, with posts noting a core operating profit of 1.79 billion, which fell short of the estimated 3.89 billion. Organic revenue growth was reported at 2.1% year-over-year, with management guiding for low-single-digit percentage growth in FY25.

TSM | +3.2% | +202.0B
Taiwan Semiconductor Manufacturing Co Ltd | Semiconductors
Taiwan Semiconductor Manufacturing Co Ltd (TSMC) reported robust financial results for Q2 2025, with earnings per share of 2.47, surpassing the analyst consensus estimate of 2.37. Revenue reached 30.07 billion, exceeding expectations of 30.04 billion and reflecting a year-over-year increase of 44.41%. The company anticipates Q3 revenue between 31.8 billion and 33 billion, with gross profit margins projected at 55.5% to 57.5%. Social media discussions highlighted TSMC's significant year-over-year net profit increase of 61%, amounting to TWD 398.3 billion, and a raised FY25 revenue forecast by 30%, implying a total of 117 billion. TSMC's stock rose over 4% in pre-market trading following these announcements, with shares noted to be trading at an all-time high of 237.56.

USB | -4.1% | -2.8B
US Bancorp | Diversified Banks
U.S. Bancorp reported its second quarter 2025 results, revealing a net income of $1.733 billion, an increase from $1.518 billion year-over-year. Pre-tax income rose to $2.293 billion, up from $2.056 billion last year. Net interest income saw a slight increase to $4.051 billion, while adjusted EPS came in at $1.11, surpassing the consensus estimate of $1.07. However, net revenue was reported at $6.98 billion, falling short of the FactSet estimate of $7.05 billion. Additionally, net interest income on a fully taxable equivalent basis was recorded at $4.08 billion, below the expected $4.13 billion. Total average loans and deposits were also below estimates, at $378.53 billion and $502.89 billion, respectively. The company anticipates total net revenue growth of 3% to 5% for fiscal year 2025, reaffirming its revenue guidance between $28.4 billion and $29.0 billion. Following the earnings announcement, U.S. Bancorp's stock declined by 4.0%.

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