Stock Prices Retreat as Semiconductor Stocks Struggle
Trade futures on Plus500 with a minimal deposit of $100! Join millions worldwide who trust Plus500, as we delve into the latest market happenings. Today, the S&P 500 Index ($SPX) and Nasdaq 100 Index ($IUXX) are experiencing dips of -0.26% and -0.59%, respectively. However, the Dow Jones Industrials Index ($DOWI) seems to be holding steady with a slight increase of +0.09%.
The tech sector is on the defensive, with chipmakers weakening after a report from The Wall Street Journal stating that a top U.S. official indicated the revocation of waivers for allies with semiconductor plants in China might be imminent.
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Markets initially rallied on easing Middle East tensions, but WTI crude prices erased gains and moved lower after reports that Iran is open to discussions on uranium enrichment limitations.
Despite a possible war, stocks find solace in the probability of negotiations and the U.S. offering a chance to settle peacefully. Additionally, the Federal Reserve Governor Waller's optimistic remarks on reducing interest rates early July have bolstered investor confidence.
Trading activity today may witness increased volatility due to the closure of approximately $6.5 trillion in June options, futures, and derivatives contracts, a phenomenon known as "triple witching."
On the economic front, the June Philadelphia Fed business outlook survey remained unchanged at -4.0, disappointing expectations for an increase to -1.5. Furthermore, the May index of leading economic indicators slipped -0.1%, marking the sixth consecutive month of decline.
Recently, the Fed Chair Powell warned about the continuous uncertainties arising from tariffs and inflation risks, complicating the Fed's ability to ease monetary policy. In response, the FOMC revised its US GDP forecast and raised its inflation forecast for the year.
The geopolitical tensions between Israel and Iran have lingered, with no signs of de-escalation. Israel has continued to strike Iranian nuclear and missile production sites, while Iranian leadership has reaffirmed their intention to respond forcefully if the U.S. directly intervenes.
There are no current disruptions to the Strait of Hormuz, accounting for 20% of world's daily crude shipments, but disruptions are being reported in navigational signals, causing a collision of two tankers.
Investors brace for negative tariff news in the upcoming week, following President Trump's announcement of sending letters to potential trading partners in the next one to two weeks.
Currently, markets are foreseeing a 15% chance of a -25 bp rate cut at the July 29-30 FOMC meeting. Overseas stock markets remain mixed, with the Euro Stoxx 50 celebrating a +0.70% rise, while China's Shanghai Composite and Japan's Nikkei Stock 225 register declines of -0.07% and -0.22%, respectively.
Bonds and Interest Rates:
Today, September 10-year T-notes (ZNU25) have experienced a slight drop of -4 ticks, causing a rise in the 10-year T-note yield by +2.8 bp to 4.419%. European government bond yields are up, with the 10-year German bund yield increasing +0.9 bp to 2.530%, and the 10-year UK gilt yield rising +1.8 bp to 4.548%.
Negative carryover from European government bonds and rising inflation expectations have contributed to T-note's pressure. However, T-note has recovered from its worst levels due to the weaker-than-expected Philadelphia Fed business outlook survey and dovish comments from Fed Governor Waller, favoring bringing interest rates down as early as July.
The Eurozone's June consumer confidence index took an unexpected dip of -0.1 to -15.3, falling short of expectations for an increase to -14.9. Additionally, May's PPI for Germany has decreased -1.2% y/y, while UK's May retail sales ex-auto fuel slipped -2.8% m/m, marking the biggest decline in nearly 1-1/2 years.
Stock Movers:
Chipmakers are significant weight on today's market, with stocks like Lam Research, KLA Corp, and Applied Materials witnessing drops over -3%. Moreover, companies like Broadcom, ASML Holding NV, Marvell Technology, Intel, Qualcomm, GlobalFoundries, Analog Devices, and NXP Semiconductors NV are declining by more than -2%.
The seven market leaders, including Amazon.com and Tesla, are also facing downward pressure, with Alphabet and Nvidia dropping more than -2%. However, stocks like MSFT and AAPL have bucked the trend, posting gains of -0.10% and +0.34%, respectively.
Accenture is the biggest loser in the S&P 500 today, shedding over -5% following the reduction of its full-year operating margin forecast to 15.6%.
Smith & Wesson Brands has plummeted by more than -15% after announcing their Q4 adjusted EPS of 20 cents fell short of expectations at 23 cents.
On the other hand, stocks like Kroger, CarMax, and GMS Inc stand out as notable gainers, with increases of more than +7%, +5%, and +29%, respectively. Bullet points styles aren't supported. Fix it by reformatting the text to avoid using bullet points. The reason for this particular stock's gain is not explicitly stated, but it may be due to earnings reports or other favorable developments.
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- Given the ongoing dip in the Nasdaq 100 Index and potential negative impacts on the tech sector, investors might consider diversifying their portfolio by looking into other sectors that are performing well. Such an action could be accomplished by investing in stocks through platforms like Plus500.
- As the Federal Reserve Governor Waller's optimistic remarks on reducing interest rates early July have bolstered investor confidence, now could be an opportune time to consider putting money into the stock market, especially since some sectors like consumer goods, as evidenced by stocks like Kroger, are currently performing well.
