S&P and Nasdaq Rise on Alphabet-Driven AI Optimism
Tesla Plunges 9% After Disappointing Q2 Earnings
US Nears Trade Deal with EU Following Japan Agreement
Trump to Visit Fed Headquarters This Afternoon
Likely to Increase Pressure on Powell Through Public Remarks
New Unemployment Claims Fall for Sixth Consecutive Week
The three major indices of the New York Stock Exchange showed mixed movements on the 24th (local time). Boosted by Alphabet, Google's parent company, posting a surprise earnings report the previous day, the S&P 500 and Nasdaq indices once again hit all-time intraday highs. Reports that the United States had reached a trade agreement with Japan and was also close to an agreement with the European Union (EU) further stimulated investor sentiment, leading to increased buying activity.
As of 11:10 a.m. on this day at the New York Stock Exchange, the blue-chip Dow Jones Industrial Average (Dow Index) was down by 109.52 points (0.24%) from the previous trading day, standing at 44,900.77. The large-cap S&P 500 index was up by 18.64 points (0.29%) at 6,377.55, and the tech-heavy Nasdaq index was trading at 21,075.88, up by 55.86 points (0.27%).
By stock, Alphabet rose by 1.3%. The previous day, Alphabet reported second-quarter revenue of $96.43 billion and earnings per share (EPS) of $2.31, surpassing market expectations compiled by LSEG (revenue of $94 billion and EPS of $2.18). Tesla, after reporting earnings that fell short of expectations, plunged by 9.11%. Tesla posted second-quarter revenue of $22.496 billion and EPS of $0.40, both below forecasts ($22.74 billion and $0.43, respectively). IBM was also down by 8.06% as its second-quarter software revenue missed market expectations.
Ross Mayfield, investment strategist at Baird, analyzed, "Considering the scale and influence of big tech and artificial intelligence (AI), Alphabet's earnings provided a positive catalyst for a market that continuously questions whether AI spending can deliver sustained investment returns," adding, "At least in the early stages of earnings season, Alphabet has provided good data signaling positive trends."
Expectations that the United States is also close to concluding trade negotiations with the EU, following the agreement with Japan, are acting as another catalyst for the stock market's rise. The previous day, the Financial Times (FT), citing multiple sources, reported that the United States and the EU were close to a trade agreement to impose a 15% reciprocal tariff on EU products. This is the same level as the 15% tariff accepted by Japan. There are also discussions underway to lower the tariff on automobiles from the current 27.5% to 15%. As a result, there is analysis that a 15% tariff will become the baseline for negotiations between the United States and its major trading partners.
President Trump stated at an AI summit held in Washington, D.C. the previous day, "We are engaged in serious negotiations with the EU," and added, "If they open their markets to American companies, we have proposed to lower tariffs."
The market is also paying close attention to President Trump's scheduled visit to the Federal Reserve headquarters later this afternoon. It will be the first official visit to the central bank by a sitting president in about 20 years, since President George W. Bush. As President Trump has been pressuring Jerome Powell, Chair of the Federal Reserve, for interest rate cuts for several days, there is growing anticipation that he will further intensify this pressure during the visit, with particular focus on his public remarks.
Employment indicators remain robust. According to the U.S. Department of Labor, the number of new unemployment claims for the week of July 13?19 was 217,000. This is the lowest level since mid-April, down by 4,000 from the previous week (221,000) and below the expert forecast of 227,000. As a result, new unemployment claims have decreased for six consecutive weeks, marking the longest declining streak since 2022.
U.S. Treasury yields are on the rise. The benchmark 10-year U.S. Treasury yield, which serves as a global bond rate benchmark, was up by 3 basis points (1bp=0.01 percentage point) from the previous trading day at 4.42%. The 2-year U.S. Treasury yield, which is sensitive to monetary policy, was up by 4 basis points from the previous day at 3.92%.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
