Week Ending July 26th, 2024

Market Moves 

Dow Jones - 40,589.34 (+1.64%)  

Nasdaq - 17,357.88 (+1.03%)  

S&P 500 - 5,459.10 (+1.11%)  

Weekly Recap

• A mixed reaction from the major indexes. While all three major indexes closed in the green on Friday, only the DOW ended the week with gains. The S&P 500 and the NASDAQ retreated for the second week in a row while the DOW saw its fourth consecutive week of gains.
• A rotating market. The U.S. equity market saw a shift going into its third week, with large caps trailing the previously lagging small-cap segment and growth equities underperforming the value style. Over the past three weeks, a large-cap benchmark fell a cumulative 1.5% while a small-cap index jumped 11.5%. On the equity style side, a growth index fell 6.6% over three weeks while its value counterpart was up 4.6%.
• Key inflation measures: Last week the Fed's preferred inflation measure, the core personal consumption expenditure (PCE) price index, which excludes food and energy prices, rose 2.6% annualized through June. This was ahead of estimates for 2.5% but flat from the prior month.
• Corporate earnings season continued to take off. Currently 41% of companies in the S&P 500 have reported second-quarter earnings results and performance is strong relative to expectations. Of companies that have reported, 78% have beaten analyst estimates, with an average upside surprise of 4.4%
• A lift to the GDP. The U.S. economy picked up momentum in the second quarter. GDP expanded at an annual rate of 2.8%, coming in ahead of the consensus forecast of economists and up from a 1.4% rate in this year’s first quarter.
• Oil dropped. Amid expectations of a decreasing global demand, the price of U.S. crude oil fell nearly 4% for the week to around $77 per barrel. This was the lowest level in about seven weeks. 
• A momentary increase in anxiety. After a sharp rise the previous week, the Cboe Volatility Index, which tracks investors’ expectations of short-term U.S. stock market volatility briefly spiked on Thursday to a level that was 55% higher than its closing level of July 12. The index subsequently retreated amid shifting investor sentiment, and it closed on Friday slightly below its closing level of the previous week.  

Most Active Stocks

• Nvidia Corp. (NVDA)
• Southwestern Energy Company (SWN)
• Tesla (TSLA)
• DexCom, Inc. (DXCM)
• Ford Motor Company (F)

Biggest Gainers

• Newell Brands, Inc. (NWL) +40.54%
• 3M Company (MMM) +22.99%
• Mohawk Industries, Inc. (MHK) +19.49%
• Charter Communications, Inc. (CHTR) +16.62%
• International Game Technology (IGT) +17.91%

Biggest Losers

• DexCom, Inc. (DXCM) -40.66%
• Saia, Inc. (SAIA) -18.95%
• AppFolio, Inc. (APPF) -10.85%
• SkyWest, Inc. (SKYW) -9.16%
• Olin Corporation (OLN) -7.18%

Weekly Notables

Donald Trump Says Hold on to Bitcoin

Donald Trump headlined the biggest bitcoin conference of the year in Nashville over the weekend. “For too long our government has violated the cardinal rule that every bitcoiner knows by heart: Never sell your bitcoin,” Trump said at the Bitcoin 2024 conference. “This afternoon I’m laying out my plan to ensure that the United States will be the crypto capital of the planet and the bitcoin superpower of the world and we’ll get it done," he added. Organizers say they were briefly in talks to have Vice President Kamala Harris appear at the conference, but she declined.

Warner Brothers Discovery Sues NBA

It was learned this past Friday that Warner Bros. Discovery is suing the NBA to keep distributing the league’s games. The company is attempting to use matching rights on a package of games earmarked for Amazon Prime Video, which the NBA chose as a media partner along with Walt Disney and NBCUniversal. The NBA had sent Warner Bros. Discovery a letter last Wednesday informing it that the league doesn’t believe its matching rights are valid for a streaming-only package of games. “Given the NBA’s unjustified rejection of our matching of a third-party offer, we have taken legal action to enforce our rights,” the company’s TNT Sports unit said in a statement. “We strongly believe this is not just our contractual right, but also in the best interest of fans who want to keep watching our industry-leading NBA content with the choice and flexibility we offer them through our widely distributed WBD video-first distribution platforms — including TNT and Max.”

Short Seller Andrew Left is Charged with Fraud by SEC 

Federal prosecutors have criminally charged the activist short seller and Citron analyst Andrew Left with securities fraud related to allegedly using his public platform to illegally profit to the tune of at least $16 million from manipulating stock market activity contrary to positions he presented to the public from 2018 through 2023. Left and his firm Citron Capital also were separately charged in a civil fraud action by the Securities and Exchange Commission, which accused them of “engaging in a $20 million multi-year scheme to defraud followers by publishing false and misleading statements regarding his supposed stock trading recommendations.”

The Week Ahead

• More quarterly earnings reports on the way. Some of the biggest tech companies are reporting this week including Microsoft, Apple, Amazon, and Meta Platforms. Their results could further test the patience of investors.
• A U.S. Federal Reserve policy meeting this week. Investors should closely watch comments following the end of the Federal Reserve’s monetary policy meeting this Wednesday for clues on whether officials are set to deliver interest rate cuts.
• Employment data is set for the end of the week. This data includes a closely watched monthly jobs report, could indicate if a nascent downshift in the labor market has become more severe.

"This is a critical time for the markets. You're having people start to question why they are paying so much for these AI businesses at the same time the market fears that the Fed will miss its chance to secure a soft landing, and it's causing a violent reaction."

-Bryant VanCronkhite, a senior portfolio manager at Allspring.

Earnings Spotlight: Apple

Apple is set to report fiscal third-quarter earnings after the bell on Thursday, Aug. 1st. The iPhone maker is expected to report revenue of $84.39 billion, according to estimates compiled by Visible Alpha, which would represent 3.1% growth from the year-ago period. Net income is projected to be $20.64 billion, or $1.34 per share, an increase from the third quarter of 2023. Apple recently reached a tentative collective bargaining contract with the first unionized company store in the country.