Ringside · Pre-Bell · July 28
- Seoul's Kospi dropped 10.84% to 6,023.66; Samsung Electronics lost 13.4% and SK Hynix 14.7%.
- Memory and equipment names lead the American open lower, Micron down 5.6% to $850.00.
- Two days of Federal Reserve meetings open today, with futures putting a move this week near 30%.
Indexes
Overnight belonged to Asia, and to the two Korean companies that make most of the world's memory. Trading in Seoul was suspended for twenty minutes when the Kospi spent a full minute more than 8% below Monday's close, and the index still finished 10.84% lower; the smaller Kosdaq was halted separately around midday. Samsung Electronics closed down 13.4%, its worst session in nearly twenty years, and SK Hynix lost 14.7%. Three separate arguments have arrived on top of each other in a week: a Chinese startup has begun mass-producing the immersion lithography machines that ASML has effectively owned, ChangXin Memory's Shanghai debut priced a domestic rival at more than four times its offer, and Nvidia's reported plan to guarantee $250 billion of OpenAI's data-centre leases has investors questioning how much of the artificial-intelligence order book is real demand. Nvidia fell 4.99% in New York on Monday, and Seoul took that and made it worse. This is not a one-day event either: the Kospi has now given back roughly 30% in July alone.
| Futures | Level | % Chg | Note |
|---|---|---|---|
| ES (S&P 500) | 7,439.75 | -0.11% | Cash index sits 59 points under its 50-day |
| NQ (Nasdaq 100) | 27,902.25 | -1.02% | Third consecutive session lower |
| YM (Dow) | 52,643.00 | +0.50% | Owns almost none of the memory complex |
| RTY (Russell 2000) | 2,957.10 | -0.10% |
| Overseas | Level | % Chg | Note |
|---|---|---|---|
| Kospi (South Korea) | 6,023.66 | -10.84% | Circuit breaker fired; worst day since March |
| Nikkei 225 (Japan) | 62,364.92 | -3.99% | Kioxia fell 18%, Tokyo Electron 11% |
| Hang Seng (Hong Kong) | 25,310.85 | +0.41% | Little memory exposure in the index |
| Euro Stoxx 50 | 6,285.85 | -0.18% |
The split inside the American futures complex is the number worth carrying into the open. Dow contracts are half a percent higher while Nasdaq 100 contracts are down a full percent, the same divergence that produced Monday's 1.20-point gain in the S&P 500 alongside a lower Nasdaq Composite.
In the News
Rates, FX, Commodities
Treasury levels below are Monday's closes, and what they describe is the Federal Reserve rather than the equity selling. Every maturity rallied on Monday as the barrel gave way, leaving the two-year at 4.30% with a Wednesday hold embedded in it that traders are describing with less conviction than usual. The dollar is why bullion is lower this morning: the index is holding near a one-month high, which makes gold more expensive for anyone paying in another currency.
| Rates (Monday close) | Level | Note |
|---|---|---|
| 2-Year Treasury | 4.30% | Prior Federal Reserve close 4.33% |
| 5-Year Treasury | 4.397% | |
| 10-Year Treasury | 4.641% | Nine basis points above the spring floor |
| 30-Year Treasury | 5.125% |
| Volatility, FX & Commodities | Level | % Chg |
|---|---|---|
| VIX | 18.98 | +1.66% |
| Dollar Index (DXY) | 101.60 | +0.06% |
| WTI Crude | $80.99 | -1.96% |
| Brent Crude | $86.30 | -2.33% |
| Gold | $4,026.00 | -1.25% |
| Nat Gas | $2.74 | -1.72% |
This is a third straight session of crude pricing a calmer Middle East, and it has now taken Brent down more than $10 from Friday's settlement.
Technicals
The S&P 500 closed Monday at 7,413.18, under a 20-day average of 7,489.95 and a 50-day of 7,472.04, and those two lines are now 18 points apart. Getting back above them is a single task this week rather than two separate ones, and the 200-day sits far below at 7,005.74. The Nasdaq Composite has the harder repair: 24,932.08 leaves it 881 points beneath its own 20-day and 1,145 beneath its 50-day.
In rates, the 10-year at 4.641% is nine basis points above 4.55%, which is where the range that held through the spring found its floor.
Nvidia is the chart to watch when the bell rings. After Monday's 4.99% decline the shares are quoted at $194.30 before the open, which leaves them $1.34 above a 200-day average of $192.96 they have not closed beneath since the autumn.
Breakouts & Breakdowns
Breakouts
Merck (MRK) — Monday's close of $130.76 is 31 cents short of a 52-week high at $131.07, with the 50-day average of $121.44 nine dollars below. A close above the high leaves nothing overhead from the past year.
Coca-Cola (KO) — at $84.07 the shares are testing a 52-week high of $84.92 from above their 20-day average of $82.80. Second-quarter results land before the bell, which will settle the test one way or the other.
Breakdowns
Lam Research (LRCX) — quoted at $278.46 before the open, a day after losing $300, the shares now sit 18% under a 50-day average of $338.37. The next reference underneath is the 200-day at $238.27.
Broadcom (AVGO) — pre-market trade at $375.85 loses the 20-day average of $382.31, the line that held on Monday when this was one of the few large chipmakers to finish higher. The 50-day at $398.68 becomes resistance.
Top Movers
Gainers
United Parcel Service (UPS) is 2.05% higher at $115.27 after second-quarter adjusted earnings of $1.76 a share against the $1.66 expected, on revenue of $22.8 billion versus a $21.81 billion estimate. Every segment grew: domestic revenue rose 6.0% to $14.93 billion, international 12.5% to $5.04 billion, and supply-chain solutions 7.8% to $2.86 billion. Management lifted the full-year revenue outlook to roughly $91.2 billion and full-year earnings to $7.22 a share, which is a company describing recovering trade volumes rather than cost cuts.
Microsoft (MSFT) is up 0.89% at $392.56 the day before its own results.
Losers
Micron Technology (MU) is down 5.58% at $850.00, the largest American casualty of the overnight selling. That price is roughly 30% below a closing peak of $1,213.56 set earlier this year, so what began as a rotation out of an expensive winner is starting to look like a re-rating. What changed is the argument rather than the demand: China supplying its own DRAM and its own lithography tools removes the scarcity the whole thesis was built on.
Applied Materials (AMAT) is 4.42% lower at $494.02, giving up $500 and trading 8% under a 50-day average of $539.09. Equipment makers take the worst of this, since the claim is not that fewer chips get made but that fewer of the machines get bought from the West. Lam Research is down 4.51% and ASML 4.20% before the open on the same logic.
Arm Holdings (ARM) is off 3.96% at $255.78, extending a decline that has taken the shares 42% below a 52-week high of $439.46.
Advanced Micro Devices (AMD) is 3.79% lower at $476.20 after Monday's 5.17% decline, a second session of the group's high-multiple names taking the most damage.
Exxon Mobil (XOM) is down 1.14% at $153.00 as crude gives back another 2%. The integrated producers surrender less than the barrel does because refining margins widen when the input gets cheaper. The sector gave up 2.11% on Monday.
Macro Calendar
| Release | Time (ET) | Consensus | Prior |
|---|---|---|---|
| Wholesale Inventories (Jun, advance) | 8:30 | n/a | n/a |
| Case-Shiller Home Prices (May) | 9:00 | n/a | n/a |
| Consumer Confidence (Jul) | 10:00 | n/a | 91.2 |
| Richmond Fed Manufacturing (Jul) | 10:00 | n/a | n/a |
Consumer confidence is the release that carries weight into Wednesday. June's reading of 91.2 was an improvement of six tenths that still came in under what forecasters looked for, and the detail underneath was worse than the headline: the share of households calling jobs hard to get climbed to 22.5%, a five-and-a-half-year high. A softer barrel should help the inflation-expectations component, and the labour question is what the committee will be arguing about behind closed doors.
Earnings Today
Before the open: United Parcel Service, which has already reported; Coca-Cola, Boeing and PayPal. Coca-Cola is looked to for 92 cents a share on $13.1 billion of revenue and has beaten the consensus earnings estimate in each of its last four quarters. Boeing carries the opposite setup, with the Street modelling a loss of about 28 cents on $24.26 billion of revenue and watching the cash line after the Federal Aviation Administration restored the company's authority to issue airworthiness certificates on July 20.
After the close: Visa and Ford, then SK Hynix in Seoul at roughly 8 p.m. Eastern. The Korean result is the one with the whole memory argument riding on it.
Drivers
1. Wednesday's statement matters less than the vote around it. A hold is the working assumption at odds near 30%, so the information arrives in the dissent count and in whatever the committee does to the inflation paragraph, and consumer confidence at 10 a.m. Eastern is the last significant data the members see before they vote. Those two inputs point opposite ways: consumer prices ran at 3.5% in June, while Brent settled $8.42 lower on Monday and has taken more off since.
2. Nvidia's 200-day average at $192.96 is the level worth marking. The shares have spent ten months above it and are quoted $1.34 over it this morning, so a close underneath would be the first time the market has treated the artificial-intelligence buildout as a trend that has broken rather than one that has paused. Broadcom slipped under its own 20-day overnight, and the equipment makers are down another 4% on top of Monday.
3. SK Hynix reports at roughly 8 p.m. Eastern, and its guidance on memory pricing is the closest thing to a direct answer anyone will get to the question Seoul spent Tuesday asking.