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Thursday, July 25

Some of the largest macro moves in the market today include: Ethereum -5.2%. USD/CNH -0.5%. Gold -1.2%. Some of the largest moves among US mega-cap stocks include: Eli Lilly and Co (LLY) -2.0%. 

The US economy has shown stronger-than-expected growth in Q2, with an annualized expansion of 2.8%, surpassing market forecasts and reflecting increases in consumer spending and private investments. Additionally, initial jobless claims fell more than anticipated to 235,000 for the week ending July 20th.

Global markets are experiencing significant volatility due to a combination of factors including disappointing earnings from major tech companies like Tesla and Alphabet which have led to sharp declines across equity indices such as the Nasdaq Composite dropping by over 3%. Furthermore, concerns about China's economic outlook following unexpected interest rate cuts by the People's Bank of China (PBoC) continue to weigh on investor sentiment globally.

In Europe, business confidence indicators reflect growing pessimism; Germany's Ifo Business Climate index declined further while France’s manufacturing climate indicator hit its lowest level since December 2020. These developments contribute additional pressure on European equities amid broader global market corrections driven by weak corporate earnings reports and macroeconomic uncertainties.

GDX [-2.6%]
VanEck Gold Miners ETF (GDX) experienced a -2.5% price movement, reflecting declines in top holdings like NEM, GOLD, and AEM. Newmont Corporation reported strong Q2 results, impacting NEM's price. Gold prices fell due to a global tech stock selloff, but factors like risk-off mood and potential demand from India may limit further losses. Social media buzz highlighted Newmont's increased costs and light EPS guidance. Silver also dropped significantly, mirroring GDX's movement, while macro events included drops in Initial Jobless Claims, unexpected decline in Durable Goods Orders, and GDP Growth Rate exceeding expectations at 2.8%.

SMH [-0.6%]
VanEck Semiconductor ETF (SMH) experienced a -1.3% price movement from Wednesday's close. Top holdings like NVDA and MU declined, with SK Hynix's growth overshadowed by a US tech sell-off. Social media buzz noted a 15% drop from the stock's peak. Macro events, including a significant drop in US Durable Goods Orders MoM and an unexpected increase in US GDP Growth Rate QoQ Adv, may have influenced the ETF's volatility. The Nasdaq 100 Index also moved negatively, potentially impacting SMH given their historical correlation.

F |-12.9%|-6.1B
Ford Motor Co (F) experienced a -12.2% price movement since Wednesday's close, aligning with the broader sector's downward trend. Ford's Q2 earnings revealed a revenue increase but a lower-than-expected EPS, particularly impacted by challenges in the Ford Model e segment. Despite this, the company highlighted successes in Ford Pro and hybrid sales growth, maintaining full-year EBIT guidance. With a focus on smaller EVs, Ford aims to enhance competitiveness amidst market shifts, emphasizing quality improvements for sustainable growth despite increased costs in the EV business. Additionally, macro events, such as US Initial Jobless Claims dropping more than expected, may influence Ford and Consumer Discretionary sector stocks due to historical sensitivity during such releases.

LUV | -5.1% | -766.9M
Southwest Airlines Co (LUV) saw its stock price drop significantly by -5.1% post-market close, driven by the company's impressive Q2 2024 results, beating profit estimates with adjusted EPS of $0.58 and sales reaching $7.40 billion. Despite challenges from activist investor Elliott Investment Management and Boeing's jet delivery delays, Southwest outperformed expectations, introducing assigned and premium seating to enhance revenue opportunities. The airline's shift towards premium seating and revenue strategies influenced the stock price movement significantly today, coinciding with American Airlines Group Inc's -6.48% decrease due to a profit warning for Q3, aligning with Southwest's correlated movement. Southwest Airlines Co is notably underperforming its sector peers amid this market activity.

EW |-22.7%|-9.2B
Edwards Lifesciences Corp's stock price dropped significantly by 23.1% in the pre-market session following disappointing Q2 results, with missed revenue estimates despite beating adjusted EPS estimates. Analysts from Evercore ISI, Stifel, and Wells Fargo drastically adjusted price targets downward, with downgrades to Neutral by Baird and Truist Securities, and to Hold by B of A Securities. The acquisitions of JenaValve and Endotronix did not offset the negative market reaction, coinciding with the substantial decline in the stock price. The company reported actual Q2 earnings slightly above expectations, but the market sentiment remained bearish due to the revenue miss.

STLA |-8.0% | -4.1B
Stellantis NV (STLA) shares dropped significantly post weak H1 results, missing adjusted operating income expectations by 6% with challenges in North America and Europe. The company foresees a tough second half due to planned production cuts, emphasizing long-term prospects on electric vehicles. H1'24 earnings showed a decline in net profit by -48% and revenue by -14%, leading to price cuts in the North America market. Analysts stress cost reductions amid ongoing challenges. Stellantis reported H1 earnings with EPS at $2.54 and revenues at $91.5B. Correlated with Ford Motor Co, STLA moved -8.3%, underperforming sector peers.

NOW |+6.1%|+9.7B
ServiceNow Inc's stock price rose by 5.9% in pre-market trading today following the departure of the company's President and Chief Operating Officer, CJ Desai, due to a policy violation related to hiring practices. This incident coincided with the release of strong Q2 earnings, with earnings per share surpassing estimates by 31 cents and revenue exceeding expectations by $30 million. Additionally, ServiceNow's Q2 cRPO increased by 22% year-over-year to $8.78 billion, leading to positive analyst reactions and raised price targets in the range of $850-$900, reflecting confidence in the company's future performance.

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