Ringside · Post-Bell · July 31
- Amazon's 15.32% jump to $271.58 supplied nearly all of an S&P 500 advance worth 0.70%.
- Three Fed officials who dissented Wednesday said Friday that increases are needed now; the 30-year yield reached 5.273%.
- The Russell 2000 fell 0.50% to 2,931.34 as the Dow logged a fourth straight winning month.
Indexes
Two markets ran in opposite directions on the last session of July. Amazon's 15.32% jump on Thursday evening's cloud results pulled the capitalization-weighted averages up with it, and the S&P 500 finished at 7,489.72. The bond market spent the same six hours pricing the other argument: the second-quarter employment cost index arrived at 0.9% against the 0.8% economists expected, the Chicago Business Barometer improved to 57.6, and the three Federal Reserve officials who voted against Wednesday's decision spent Friday explaining why they wanted an increase. Ten-year yields rose 8 basis points to 4.743% and the thirty-year reached 5.273%, a level last seen 19 years ago. Anything that has to pay for money was marked down accordingly, with real estate off 0.51%, utilities off 0.69% and the Russell 2000 down 1.48% at its worst point of the morning. The S&P dipped to 7,399.83 before recovering, and the 1.20 percentage points separating its gain from the Russell's loss is the widest such gap in two weeks.
| Index | Close | % Chg | Note |
|---|---|---|---|
| S&P 500 | 7,489.72 | +0.70% | Ends July 0.13% lower |
| Nasdaq Composite | 25,373.85 | +1.00% | Still down 3.20% for the month |
| Dow Jones | 52,485.03 | +0.53% | Fourth winning month in a row |
| Russell 2000 | 2,931.34 | -0.50% | Only major average lower |
Sector Heat Map
| Sector | % Chg | Note |
|---|---|---|
| Consumer Discretionary (XLY) | +3.29% | One holding is roughly a fifth of the fund |
| Communication Services (XLC) | +1.56% | Alphabet added 6.73% |
| Energy (XLE) | +1.00% | Crude settled higher on Hormuz |
| Industrials (XLI) | +0.81% | |
| Financials (XLF) | -0.11% | |
| Technology (XLK) | -0.22% | Apple outweighed the semiconductors |
| Consumer Staples (XLP) | -0.49% | |
| Real Estate (XLRE) | -0.51% | |
| Health Care (XLV) | -0.59% | AbbVie down 2.51% |
| Utilities (XLU) | -0.69% | Lower in all five sessions this week |
| Materials (XLB) | -2.34% | Linde is about half of it |
Four sectors rose and seven fell on a day the S&P gained 0.70%, which is what an index looks like when two companies supply the arithmetic.
In the News
Rates, FX, Commodities
Wage data and three central bankers arguing for tighter policy moved the whole curve, and crude added a second push in the afternoon when the Hormuz strikes were reported. The dollar index fell anyway, because the yen held the bid it found on Thursday in what traders read as official buying.
| Treasury | Close | Chg |
|---|---|---|
| 2-Year | 4.287% | +5.9 bp |
| 10-Year | 4.743% | +8.0 bp |
| 30-Year | 5.273% | +6.5 bp |
| 2s10s Spread | +45.6 bp | +2.1 bp |
| Volatility, FX & Commodities | Close | % Chg |
|---|---|---|
| VIX | 15.99 | -6.38% |
| WTI Crude | $84.67 | +1.29% |
| Brent Crude | $87.84 | +1.11% |
| Gold | $4,098.60 | -1.22% |
| Nat Gas | $2.77 | +0.36% |
| Dollar Index (DXY) | 99.777 | -0.40% |
| USD/JPY | 157.57 | -1.34% |
September Brent expired during the session, so the level above is the October contract, which trades a couple of dollars below the September prices quoted earlier this week. West Texas Intermediate ended July about 20% higher.
Technicals
Both short averages held by a hair. A 7,489.72 finish sits above the 20-day at 7,481.15 and the 50-day at 7,471.51, with the 200-day 6.6% lower at 7,024.11, and the June 2 closing peak of 7,609.78 is 1.58% away.
The Nasdaq 100 has not repaired anything. At 28,274.20 it remains 1.9% under a 20-day of 28,818.15 and 3.8% under a 50-day of 29,389.66, and a 0.60% gain closes very little of that.
Ten-year paper broke out of the 4.48%-to-4.71% range that had held all month, finishing at 4.743%. Nothing since 2007 sits above the thirty-year at 5.273%, so the marks that matter are underneath it, beginning with 5.20%.
Micron Technology (MU) opened at $919.65 and reached $930.88 inside the first hour on the Korean memory rally. It gave back every dollar of that and closed at $823.03, near the $818.00 low.
Breakouts & Breakdowns
Breakouts
Alphabet (GOOGL) — $356.13 clears a 20-day average of $348.05 on the DeepMind robotics release. The intraday high of $358.55 stopped 19 cents under the 50-day at $358.74, which is the level to clear.
Chevron (CVX) — $196.83 puts the shares back at the top of their July range, 7.7% above the 50-day at $182.75. The twelve-month high of $214.71 is 9.1% up; the 20-day at $185.34 is the first support back.
Breakdowns
Linde (LIN) — $478.38 loses the 20-day at $515.86 and the 50-day at $514.50 in a single session. The 200-day at $474.09 is now 0.9% below and is all that stands before the $387.78 twelve-month low.
Micron Technology (MU) — $823.03 failed at $930.88 and gave up the whole gap higher, though it still holds 11% above Wednesday's $739.00 close. The 20-day at $911.69 is 10.8% overhead.
Levels, Revisited
Microsoft (MSFT): the 200-day near $434 was called the last average still overhead Thursday morning. It cleared that day and closed the week at $464.72.
Starbucks (SBUX): the move through the $108.37 twelve-month closing high lasted part of one session. Friday's close was $105.25, back at the 20-day.
General Dynamics (GD): Wednesday's clearance of $395.43 reversed inside the opening hour to a $380.96 close. It finished the week at $383.42.
Altria (MO): the 20-day at $72.45 and 50-day at $71.92 lost on Thursday have not been recovered; $68.33 Friday, with the 200-day at $65.57 beneath.
Shell (SHEL): held. $91.98 keeps the shares above the $85.62 20-day, and the $94.90 twelve-month high is 3.2% up.
Top Movers
Gainers
Amazon.com (AMZN) finished at $271.58, a 15.32% session that took the shares to within 2.5% of their twelve-month high. At $36.08 a share, the move is most of the reason the Dow rose 276.97 points. The buying was not about the headline profit, which is inflated by a one-time mark on the Anthropic holding. It was about the cloud division growing 37% from a year earlier, a third straight quarterly acceleration after two years of decay, which is the same case Microsoft made on Thursday.
Alphabet (GOOGL) added 6.73% to $356.13 after Google DeepMind published three embodied artificial-intelligence models, including Gemini Robotics 2, aimed at the coordination and dexterity problems that have held humanoid machines back. Robot revenue is years away. What the shares repriced was the question pressing on them all month, which is whether the capital going into generative computing produces anything proprietary.
Eaton (ETN) gained 7.32% to $415.20 on quarterly results and a third-quarter forecast above where analysts had it, which for a company selling electrical equipment into data-center construction is the same trade as the semiconductors, arriving through a different door.
Losers
Apple (AAPL) fell 7.35% to $308.91 after beating on both headline lines and missing on the two that carry the multiple. Services landed about half a billion dollars light and Greater China closer to three-quarters of a billion, and the current-quarter forecast was the third disappointment. Apple lost $24.52 a share against Amazon's $36.08 gain, so in a price-weighted index it offset about two-thirds of what Amazon put in.
Linde (LIN) dropped 5.95% to $478.38 on its own quarterly report, the largest decline in the S&P 500's materials sector and roughly half of that sector's 2.34% loss by itself. Contracted volumes and predictable pricing make the industrial-gas business the closest thing the sector has to a bond substitute, which is the profile a 19-year high in the long bond punishes.
Key Macro Data Today
Wages did the work on rates, and the other two beat as well.
| Release | Consensus | Actual | Reaction |
|---|---|---|---|
| Employment Cost Index, Q2 | +0.8% | +0.9% | 2-year yield +5.9 bp |
| Chicago Business Barometer, July | — | 57.6 | Above June's 56.7 |
| Michigan Sentiment, July final | 54.0 | 55.2 | Five-month high |
Wage costs are the part of inflation that policymakers treat as durable, because pay rises are hard to reverse, and 0.9% gave the dissenters something to point at. Compensation costs are 3.4% above a year ago; inflation-adjusted wages fell 0.4% over the same span.
Notable Earnings This Session
Energy supplied the morning's headline numbers; the rest cleared without incident.
Pre-Open
Chevron's adjusted $6.06 a share cleared a $5.57 consensus. Exxon's adjusted $3.52 fell 11 cents short of its own, and Exxon (XOM) still finished only 0.97% lower at $155.44. Also reporting before the bell: AbbVie, Colgate-Palmolive, Dominion Energy, Cameco, Cboe Global Markets, T. Rowe Price Group, Moderna and Sony Group.
Post-Close
The after-hours calendar was empty, which is how Fridays usually run. Palantir Technologies (PLTR) reports Monday evening.
Drivers
1. How far the tightening argument travels beyond three regional presidents. The dissenters are the loudest voices on a committee that voted 9-3 to hold, and Friday's wage reading is the kind of evidence that moves the people in the middle. The July ISM manufacturing index lands Monday with economists at 54.0 against 53.3, and the July employment report follows on Friday, August 7.
2. Palantir Technologies Monday evening, then Advanced Micro Devices on Tuesday. Both get read as proxies for whether spending on artificial intelligence converts into revenue at companies that are not hyperscalers. Caterpillar, Merck, McDonald's and Pfizer report Tuesday morning and will say more about the rest of the economy.
3. The narrowness. Two stocks produced most of Friday's index gain while seven of eleven sectors fell, a configuration that has resolved in both directions this year. The Russell 2000 ended July down 3.08% and sits 3.8% below the 3,046.59 high it set on July 1.