Alphabet and Tesla to Announce Earnings on July 23
"Magnificent 7 Net Profit Up 14%... S&P Average 3.4%"
U.S. Commerce Secretary Dismisses Possibility of Further Tariff Suspension
Expresses Willingness to Continue Negotiations After August 1
Powell to Deliver Speech on July 22... Will He Offer Clues on Future Rate Path?
The three major U.S. stock indices opened higher on July 21 (local time) on the New York Stock Exchange. Investors are closely watching the upcoming earnings reports from big tech companies this week, as well as developments in U.S. trade agreements.
As of 9:31 a.m. on the same day on the New York Stock Exchange, the Dow Jones Industrial Average, which is focused on blue-chip stocks, was up 69.04 points (0.16%) from the previous trading day, standing at 44,411.23. The S&P 500 Index, which centers on large-cap stocks, rose 15.25 points (0.24%) to 6,312.04, while the tech-heavy Nasdaq Index was trading at 20,975.2, up 79.54 points (0.38%).
The market is expected to gauge the resilience of the U.S. economy through the second-quarter corporate earnings reports that will continue this week. According to market research firm FactSet, 62 S&P 500 companies have reported earnings so far, and 85% of them have posted results that exceeded analysts' expectations. The upcoming big tech earnings are expected to add momentum to what has been a smooth earnings season. Google parent company Alphabet and Tesla are scheduled to announce their results on July 23. FactSet projects that the second-quarter net profit of the so-called "Magnificent 7" (Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla) will increase by 14% compared to the same period last year. This is four times higher than the average net profit growth of the remaining 493 S&P 500 companies (3.4%). As the Nasdaq continues to hit record highs, future market trends are likely to be determined by the performance of big tech companies.
Max Kettner, chief multi-asset strategist at HSBC Holdings, said, "The U.S. stock market, in particular, still has some room for further gains," adding, "It's important to remember that this earnings season started with very low expectations."
Mark Malek, chief investment officer at Siebert Financial, said, "The S&P 500 Index hit an all-time high as the earnings season began," and added, "If we can get through this earnings season without any major failures, this will be an extremely important moment for sustaining the current upward momentum in the market."
Tariff news is also a key point of interest. U.S. Secretary of Commerce Howard Lutnick announced that reciprocal tariffs will be imposed as scheduled from August 1. In a CBS interview the previous day, he dismissed the possibility of another extension of the tariff suspension after August 1, stating, "No, it is a strict deadline." Previously, President Donald Trump had suspended the implementation of reciprocal tariffs until July 8 after they took effect in early April, and then extended the suspension by about three more weeks. Secretary Lutnick also said, "However, even after that, we cannot prevent them from talking to us," indicating that countries that fail to reach a trade agreement with the U.S. by the end of this month will still be subject to tariffs but can continue negotiations with the U.S. The market is watching to see whether major countries such as South Korea, Japan, and the European Union (EU) can reach a trade agreement with the U.S. before August 1.
A speech by Federal Reserve Chair Jerome Powell, who is under persistent pressure from President Trump to cut interest rates, is scheduled for July 22. As this will be his last public statement before the regular Federal Open Market Committee (FOMC) meeting on July 29-30, all eyes are on what Powell will say regarding inflation, employment, and the future path of interest rates. Attention is also focused on whether he will comment on the White House's repeated threats and withdrawals of the possibility of his dismissal.
Yields on U.S. Treasury bonds are falling, especially for long-term maturities. The yield on the benchmark 10-year U.S. Treasury note is at 4.37%, down 5 basis points (1bp = 0.01 percentage point) from the previous session. The yield on the 2-year Treasury note, which is sensitive to monetary policy, remains unchanged from the previous day at 3.84%.
By stock, Block, a major U.S. fintech company that will be included in the S&P 500 Index starting July 23, is surging by 7.65%. Social networking service company Pinterest is up 2.6% after Morgan Stanley upgraded its investment rating from "equal weight" to "overweight." Telecommunications company Verizon is up 2.32% after announcing its second-quarter results. Alphabet and Tesla, both reporting earnings this week, are up 1.68% and 0.75%, respectively.
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