[New York Stock Market] Mixed Trends Ahead of FOMC and Big Tech Earnings... Tesla Up 5.6%

Big Tech Earnings Released Starting MS on 30th
FOMC on 30-31st... Likely to Hint at September Rate Cut

The three major indices of the U.S. New York stock market closed mixed in a narrow range on the 29th (local time). Investors remained cautious ahead of this week's Federal Open Market Committee (FOMC) meeting. Big tech companies, which are about to release earnings, saw buying momentum as investor expectations led to gains.

On the day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average fell 49.41 points (0.12%) from the previous trading day to close at 40,539.93. The large-cap-focused S&P 500 index rose 4.44 points (0.08%) to 5,463.54, and the tech-heavy Nasdaq index gained 12.32 points (0.07%) to finish at 17,370.2.

By individual stocks, ON Semiconductor surged 11.54% after reporting earnings that exceeded market expectations. Tesla jumped 5.6% after investment bank Morgan Stanley named it the top pick in the automotive sector. McDonald's rose 3.74% despite news that its quarterly sales declined for the first time since 2020. Apple increased by 0.13%, and Microsoft (MS) rose 0.34%.

This week, investors' attention is focused on the earnings reports of major tech companies. Following Alphabet, Google's parent company, and Tesla releasing their Q2 results last week, MS and AMD will report earnings on the 30th. On the 31st, Meta, Facebook's parent company, and Qualcomm will announce results, followed by Apple, Amazon, and Intel on the 1st of next month. If the big tech earnings released this week exceed expectations, the large tech stocks that fell last week are expected to create a rebound trend.

Sam Stovall, Chief Investment Strategist at CFRA Research, analyzed, "A moving market tends to keep moving, which is currently stimulating investors," adding, "Today's slight market rise was supported by optimism about Q2 earnings."

Cross Asset Research Head at Silex said, "If other companies among the Magnificent 7 report good earnings, it could stop the movement toward the correction we have experienced," and added, "It could be an interesting entry point for investors."

The FOMC meeting held on the 30th and 31st is also a major event attracting investors' attention this week. The U.S. Federal Reserve (Fed) is expected to keep the benchmark interest rate unchanged at 5.25-5.5% for the eighth consecutive time at the July FOMC, while providing clues for a rate cut in September. Recent inflation slowdown and signs of cooling in the labor market have led to analyses that the Fed has laid the groundwork for a rate cut.

The market is taking a rate cut in September as a given. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market fully reflects a 100% probability that the Fed will cut rates by at least 0.25 percentage points at the September FOMC. The possibility of a 0.5 percentage point cut stands at 10.4%.

Anna Wong, an economist at Bloomberg Economics, analyzed, "Most Fed officials will agree at the July meeting that the risks of a slowdown in full employment and a rise in inflation are nearly balanced," and added, "There is expected to be broad consensus that a rate cut will be appropriate soon."

U.S. Treasury yields are mixed. The 10-year U.S. Treasury yield, a global bond yield benchmark, traded at 4.17%, down 3 basis points (1bp = 0.01 percentage points) from the previous day. The 2-year U.S. Treasury yield, sensitive to monetary policy, remained at 4.39%, the same level as the previous day.

International oil prices declined. West Texas Intermediate (WTI) crude oil fell $1.35 (1.8%) from the previous day to close at $75.81 per barrel, and Brent crude, the global oil price benchmark, dropped $1.35 (1.7%) to finish at $79.78.