ForexMart's Daily Market Analysis

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XAU/USD. Review and analysis

Today, the price of gold continues its decline.

The US dollar, recovering confidently from the previous day's four-month low and slowly rising, has become the main factor dragging the commodity down for the third consecutive day.

In addition, some profit-taking, especially after the recent rise of more than 6.5% since the beginning of the current month, further contributes to the decline. However, the potential for further decline is limited. Investors are likely convinced that the Federal Reserve will start lowering borrowing costs in September, with the possibility of two more rate cuts by the end of the year. This keeps the yield on US Treasury bonds defensive and limits the appreciation of the US dollar.

However, the tendency to avoid risk amid current market conditions could support gold as a safe-haven asset. Additionally, geopolitical tensions and demand from central banks should help limit significant declines in the price of non-yielding yellow metal.

From a technical perspective, any further decline will find decent support around $2413-2412, just before the round level of $2400. This is followed by a horizontal breakthrough point at $2390-2388, triggering technical selling in case of a decisive break. The precious metal will then accelerate its decline to test the 50-day simple moving average (SMA), which is currently near the $2358-2357 area. A sustained decline below this level will expose the 100-day SMA near the $2311 zone, with intermediate support around $2330.

On the other hand, the Asian session high of around $2445 now serves as an immediate obstacle, above which the yellow metal may rise to $2469-2470 – the high of the American session. Given that the oscillators on the daily chart remain comfortably in positive territory, bulls may attempt to retest the historical high around $2483-2484 and reach the psychological mark of $2500.
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Friday and Biden Weekend: Fiscal Week Outlook

Wall Street opened the morning with news that came as no surprise: President Joe Biden announced his withdrawal from the presidential race. The market reacted mutedly to the news, with Wall Street futures slightly higher, bond yields slightly lower, and the dollar virtually unchanged.

Biden has thrown his support behind his Vice President Kamala Harris, giving her a lead position for the nomination at the Democratic National Convention, which runs from August 19 to 22. It is also possible that the party may consider a virtual nomination before the convention.

According to online betting site PredictIT, the price for Donald Trump to win has fallen 5 cents to 59 cents, while the price for Harris has increased 13 cents to 40 cents. California Governor Gavin Newsom, another possible Democratic candidate, is still behind at 3 cents.

Goldman Sachs said in a report that it does not expect significant changes in the Democrats' fiscal and trade policies if Harris wins.

Back to Friday's events.

U.S. stocks continued to decline on Friday as chaos continued to rage around a global software outage, adding further uncertainty to an already volatile market.

Massive technology disruptions have hit industries including aviation, banking and healthcare after a software bug at Crowdstrike (CRWD.O) disrupted Microsoft's (MSFT.O) Windows operating system.

While the vulnerability has been identified and fixed, some services continue to experience technical difficulties.

Crowdstrike shares fell 11.1%, while rival cybersecurity companies Palo Alto Networks (PANW.O) and SentinelOne (S.N) rose 2.2% and 7.8%, respectively.

All three major U.S. stock indexes ended in the red, with the Dow Jones Industrial Average the hardest hit.

On a weekly basis, the Nasdaq and S&P 500 posted their worst performances since April, while the Dow, which had hit records earlier in the week, rose Friday to Friday.

"This tech disruption adds an element of uncertainty and weighs on the Nasdaq as a whole," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. "But overall it won't have a huge impact. Some buying will be delayed. Plus, it's a summer Friday, and the downtime is making investors take a wait-and-see attitude."

The CBOE Volatility Index (.VIX), often seen as a gauge of investor anxiety, hit its highest since late April. Small-cap stocks in the Russell 2000 (.RUT), which had previously benefited from a decline in interest in Big Tech, ended the day slightly lower.

Nvidia (NVDA.O) was the biggest decliner among chip stocks. The Philadelphia SE Semiconductor Index (.SOX) was among the laggards, down 3.1%.

In addition, New York Federal Reserve President John Williams reiterated that the central bank remains committed to reducing inflation to its 2% target.

According to CME's FedWatch tool, the chances that the Fed will begin cutting rates after its September meeting are estimated at 93.5%.

The Dow Jones Industrial Average (.DJI) fell 377.49 points, or 0.93%, to 40,287.53. The S&P 500 (.SPX) fell 39.59 points, or 0.71%, to 5,505. The Nasdaq Composite Index (.IXIC) lost 144.28 points, or 0.81%, to 17,726.94.

Among the 11 major sectors in the S&P 500, energy (.SPNY) was the biggest decliner, while health care (.SPXBK) and utilities (.SPLRCU) were up.

The second-quarter earnings season ended in the first full week of August, with 70 S&P 500 companies reporting results. Of those, 83% beat analysts' estimates, according to LSEG.

Analysts now forecast that the S&P 500 will post 11.1% annualized earnings growth, up from the previous estimate of 10.6% on July 1.

Next week brings big earnings from Tesla (TSLA.O), Alphabet (GOOGL.O), IBM (IBM.N), General Motors (GM.N), Ford (F.N) and many more.

"Earnings season is just getting started, but the results are already impressive," said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. "With a lot of big companies reporting next week, we want to hear how strong the consumer is and what the outlook for future economic growth is."

Eli Lilly (LLY.N) shares rose 1.0% after China approved its weight-loss drug tirzepatide. Meanwhile, Intuitive Surgical (ISRG.O) shares rose 9.4% on better-than-expected second-quarter results.

Travelers (TRV.N) shares fell 7.8% on weaker-than-expected net premium growth.

Netflix (NFLX.O) fell 1.5% in choppy trading after warning that third-quarter subscriber growth would be weaker than last year.

Oilfield services company SLB (SLB.N) rose 1.9% on strong second-quarter earnings.

Declining stocks outnumbered advancing ones on the NYSE by a 2.11-to-1 ratio; on the Nasdaq, decliners outnumbered decliners by a 1.91-to-1 ratio.

The S&P 500 posted 27 new 52-week highs and four new lows, while the Nasdaq Composite posted 50 new highs and 99 new lows. Volume on U.S. exchanges totaled 10.54 billion shares, below the 11.72 billion average over the past 20 trading days.

Last week saw a significant investor shift away from big tech companies to smaller companies and banks, resulting in a loss of about $900 billion in the S&P 500 tech sector.

The pullback was not surprising, given that giants like Alphabet (GOOGL.O), Tesla (TSLA.O), Amazon.com (AMZN.O), Microsoft (MSFT.O), Meta Platforms (META.O), Apple (AAPL.O) and Nvidia (NVDA.O) have accounted for about 60% of the S&P 500's gains this year.

That situation has set the stage for strong second-quarter results, including from mega-caps like Tesla and Google parent Alphabet.

Expectations are high, with full-year earnings expected to rise 17% in tech and 22% in communications.
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Hot forecast for EUR/USD on July 23, 2024

Without any economic or political news, the market has literally come to a standstill. Today's situation is somewhat similar, as aside from the secondary housing market data, the economic calendar is almost empty. Moreover, housing reports have a feeble impact. However, according to multiple statements, US President Joe Biden may address the nation today. He is expected to officiallyendorse Kamala Harris as the Democratic Party candidate. It seems that the incumbent vice president will be the one to challenge Donald Trump. The key point here is that the Democratic Party has quickly settled on its candidate, which significantly reduces political risks. This could potentially support the dollar.

The EUR/USD pair has stalled just below the 1.0900 level, while the corrective cycle from the lower range of the psychological level of 1.0950/1.1000 remains intact.

On the 4-hour chart, the RSI indicator is moving in the lower area, indicating an increase in the volume of short positions on the euro.

As for the Alligator indicator in the same time frame, the lines are intertwined, meaning that the upward cycle is slowing down.

Outlook
To support the bearish bias, the quote must settle below the 1.0860 level. In this scenario, the euro could move towards the 1.0800 level. The bullish scenario will come into play if the price returns above the 1.0900 level.

Complex indicator analysis suggests a correction in the short-term and intraday time frames.
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Tech Profits Fail to Save Wall Street from Declines

Wall Street's major indices ended the session marginally lower on Tuesday, erasing modest intraday gains in the final minutes of trading as investors looked to fresh earnings reports from Alphabet (GOOGL.O) and Tesla (TSLA.O).

The so-called "Magnificent Seven" companies reported results after the market closed, posting positive financial results for the second quarter.

Tesla surprised analysts with an unexpected revenue gain, delivering more cars than expected on the back of price cuts and incentives. Meanwhile, Alphabet beat revenue estimates, helped by higher digital ad sales and strong demand for its cloud services.

However, ahead of the earnings call, Tesla shares fell 2%, while Google's parent company rose 0.1%.

The tech giants' financial results are critical to understanding whether they can sustain their record growth in 2024 or whether U.S. stocks are overvalued. Investors are also concerned about whether the shift away from mega-caps to less-efficient sectors will continue.

The Russell 2000 small-cap (.RUT) rose 1% on the day.

"We're focusing on earnings because that's what's going to be the story this week and next, and the market's reaction to those numbers will be very telling," said Jack Janasiewicz, chief portfolio strategist at Natixis Investment Managers.

Speaking about the shift in focus in smaller-cap stocks, the expert added: "The jury is still out on this and we need more evidence that this is sustainable, which again comes down to earnings."

Big-cap stocks initially supported the markets on Tuesday, with all three benchmark indexes in positive territory. However, while the likes of Apple (AAPL.O), Microsoft (MSFT.O) and Amazon.com (AMZN.O) rose between 0.3% and 2.1%, the overall market rally slowed in the afternoon, leading to a slight decline in the final results.

Stock markets were also under pressure from disappointing earnings from big-name companies.

United Parcel Service (UPS.N), a leading indicator of the health of the global economy, fell 12.1% after earnings fell short of expectations amid weaker delivery demand and rising labor costs. UPS shares ended the day at their lowest in four years.

General Motors (GM.N) fell 6.4% despite reporting strong second-quarter results and raising its full-year profit forecast. Comcast (CMCSA.O) lost 2.6% after disappointing revenue data.

NXP Semiconductors (NXPI.O) fell 7.6% after reporting third-quarter revenue that missed expectations, dragging the Philadelphia SE Semiconductor (.SOX) index down 1.5%.

Spotify (SPOT.N) jumped 12% after reporting record quarterly profit that slightly beat analysts' expectations. Coca-Cola (KO.N) also rose 0.3% after raising its full-year sales and profit forecasts.

Of the first 74 S&P 500 companies to report quarterly results this season, 81.1% beat estimates, according to LSEG.

Yanasevich noted that while it's too early to draw definitive conclusions, the current earnings call shows that companies that miss expectations are suffering greatly, even if their results are generally positive. High market prices and expectations don't always guarantee significant stock gains.

"If your results don't meet expectations, the punishment may be more severe given current market conditions," he added.

The S&P 500 (.SPX) fell 8.67 points, or 0.16%, to 5,555.74. The Nasdaq Composite (.IXIC) fell 10.22 points, or 0.06%, to 17,997.35. The Dow Jones Industrial Average (.DJI) lost 57.35 points, or 0.14%, to 40,358.09.

Eight of the S&P's 11 major sectors ended the day in the red, with energy (.SPNY) the worst performer, down 1.6% as U.S. oil prices fell to a six-week low.

Trading volume on U.S. exchanges totaled 10.45 billion shares, below the 20-day average of 11.33 billion.

The Federal Reserve's core consumer spending index, the benchmark inflation gauge, is due out Friday. The yield on the benchmark 10-year Treasury note fell 0.9 basis point to 4.251%.

"The market is now at a stage where we need real results to confirm the rally," said Wasif Latif, chief investment officer at Sarmaya Partners.

The MSCI World Share Index (.MIWD00000PUS) was down 0.06% at 816.37. On Wall Street, all three major indexes gave up their morning gains to end lower, led by losses in energy and utilities.

The pan-European STOXX 600 (.STOXX) was up 0.13%, led by gains in tech. In Asia, the MSCI Asia-Pacific Index outside Japan (.MIAPJ0000PUS) ended 0.30% higher at 566.92.

"We have seen a strong rally this year, with a lot of positives already built into it, including earnings and rate cuts," Latif added.

Vice President Kamala Harris will campaign in the battleground state of Wisconsin on Tuesday after winning the majority of delegates to the Democratic National Convention, strengthening her position as the party's presumptive nominee.

The U.S. dollar was broadly stronger, while the yen extended gains against the greenback for a second straight day.

The dollar index, which tracks the dollar against a basket of major currencies, rose 0.14% to 104.45. The euro was down 0.37% at $1.0849, while the yen gained 0.9% against the dollar to 155.63 yen per dollar.

Crude oil prices fell about 2% to a six-week low on rising expectations for a Gaza ceasefire and growing concerns about Chinese demand. Brent crude futures were down 1.7% to settle at $81.01 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 1.8% to settle at $76.96 a barrel.

Gold was up, with spot prices up 0.43% to $2,407.87 an ounce. U.S. gold futures were also up 0.43% to settle at $2,402.40 an ounce.

Bitcoin, which had earlier risen on expectations that a potential Trump administration would be more lenient on cryptocurrency regulations, was down 3.60% to $65,698. Ethereum was also down 0.48% to settle at $3,473.
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US Election: How Uncertainty Impacted Markets and Trillions of Dollars Escaped from Stocks

"Markets have a strong aversion to uncertainty, and with the polls close to 50-50, it's as uncertain as it gets," said Ross Yarrow, managing director of U.S. equities at investment bank Baird.

Wall Street's S&P 500 (.SPX) fell 2.3% on Wednesday, its biggest one-day loss since December 2022, as Big Tech, which accounts for a significant portion of U.S. and global indexes, fell. The decline continued Thursday morning, spreading to European markets.

Investors, wary of further selling, have turned to small-cap stocks, UK assets and gold as possible safe havens.

Of particular concern to global markets is the possibility that competition for votes on big spending plans could lead to potential turmoil in the US debt market, weighing on global stocks and bonds whose value depends on long-term Treasury yields.

The 30-year US Treasury yield rose above the two-year yield last week as big investors began to shy away from long-term US credit risk as the budget deficit widened to nearly $2 trillion.

Emerging market stocks and bonds have come under pressure from President Trump's proposed tariff hikes, said Adam Norris, a multi-manager at Columbia Threadneedle. Higher tariffs are having a negative impact on the economies and currencies of exporting countries.

Stock market volatility (.VIX) has started to rise from its lows as traders shift between stock sectors based on the changing election odds.

Tech stocks from the U.S. to Amsterdam have felt the pressure after Trump proposed earlier this month to cut U.S. support for Taiwan, a key link in the chip supply chain.

Meanwhile, the Russell 2000 index of U.S. small-caps (.RUT) has risen on expectations that Trump's growth policies will favor domestically focused companies over global tech giants.

The rotation could end, however, if tech or consumer stocks heavily dependent on Chinese supply chains rise as Trump falls in the polls.

Benjamin Mehlman, chief investment officer at Edmond de Rothschild Asset Management, expressed caution on European exporters due to potential tariff risks if Trump wins, preferring to invest in smaller, less global European companies.

Now on to global financial news.

More than $3 trillion has been pulled out of global equities in recent days.

Stock markets plunged into a multi-trillion-dollar slump on Thursday as a slide in global tech stocks sent investors seeking refuge in traditionally safe havens like bonds, the yen and the Swiss franc.

Europe's biggest bourses opened the day down more than 1% as traders in Europe and Asia reacted to the Nasdaq's worst day since 2022 (.IXIC) on Wednesday following disappointing earnings reports from giants Alphabet and Tesla.

Chinese stocks, iron ore and oil prices also extended their losses after a surprise move by China's central bank to cut long-term interest rates added to concerns about the world's second-largest economy.

The sell-off in stocks has increased bets on interest rate cuts around the world, with futures pointing to a 100% chance of Federal Reserve easing in September. A sharp rise in market volatility (.VIX) added pressure on carry trades, sending the U.S. dollar down 0.7% to 152.78 yen on Thursday.

MSCI's broadest index of global shares (.MIWD00000PUS) fell 1%, while Japan's Nikkei (.N225) fell 3.3%, partly due to an 11% plunge in Nissan Motor (7201.T) after the company reported a 99% drop in quarterly profit.

Taiwan (.TWII) markets remained closed for a second day due to a typhoon.

Chinese blue-chip stocks (.CSI300) fell 0.9%, while the Shanghai Composite Index (.SSEC) also fell 0.9%, hitting a five-month low.

Hong Kong's Hang Seng (.HSI) fell 1.7%, unhelped by Beijing's latest round of economic easing.

On Wall Street, the Nasdaq (.IXIC) lost nearly 4% as weak earnings results from Alphabet and Tesla dented investor confidence in the already lofty valuations of Big Tech stocks.

The decline added to recent market volatility, with the Wall Street Fear Index (.VIX) hitting a three-month high. Investors sought safety in cash and highly liquid short-term debt as two-year U.S. Treasury yields fell to their lowest in nearly six months on Wednesday.

"There are a lot of factors weighing on equity markets right now," said Jeff Yu, senior currency and macro strategist at BNY Mellon in London.

He also pointed to declining auto sales in the US, Europe and Japan, as well as recent interest rate moves in China, as clear signs of weakening global consumer demand.

Another big factor was the strengthening of the yen, which rose more than 1% to its highest in 2 1/2 months, ahead of a Bank of Japan meeting next week to discuss whether to raise interest rates.

The Swiss franc also strengthened 0.5% to 0.88 per dollar, adding 0.7% overnight.

Shorter-term bonds extended gains, helped by comments from former New York Federal Reserve President Bill Dudley that the central bank should cut rates, preferably at its policy meeting next week.

The yield on two-year Treasury notes fell another 3 basis points to 4.3894%, after falling 4 basis points on Wednesday. Ten-year Treasury yields also fell 2 basis points to 4.2622% on Thursday.

In commodities, iron ore prices fell nearly 1% on lingering concerns about China's economy. Copper futures fell 1.2%, while oil prices remained near six-week lows.

Brent crude futures fell 0.5% to just over $81 a barrel, while U.S. West Texas Intermediate (WTI) crude also fell 0.5% to $77.23 a barrel. Gold prices fell 1% to $2,373.62 an ounce.
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XAU/USD. Review and Analysis

Today, the price of gold attracts some buyers on the decline but remains constrained within the broader trading range of the previous day, staying below the round level of $2400. A weaker tone in the stock markets and geopolitical risks stemming from conflicts in the Middle East are the main factors supporting precious metal prices. Increasing expectations of the start of the Fed's rate-cutting cycle keep dollar bulls on the defensive below the two-week high reached on Monday, benefiting the non-yielding yellow metal.

However, gold price growth will remain limited as traders prefer to wait for additional signals on the Fed's monetary policy path before making a firm decision on the short-term direction. Accordingly, attention will remain focused on the results of the two-day Federal Open Market Committee (FOMC) meeting, which concludes on Wednesday. Along with important U.S. macroeconomic data, including Friday's nonfarm payrolls (NFP) report, this will influence the dynamics of the U.S. dollar and, consequently, the XAU/USD pair. Therefore, it would be prudent to wait for some follow-up buying before confirming that the recent pullback from the all-time high has ended.

From a technical perspective, the overnight failure to gain acceptance above the round level of $2400 and the subsequent decline call for some caution before positioning for significant growth. Moreover, the oscillators on the daily chart have just begun to gain negative momentum, suggesting that the path of least resistance is likely downward. However, bearish traders will need to wait for a sustained break below the support at the 50-day simple moving average (SMA), currently around the $2358 level, before opening new positions.

Some follow-up selling below last week's swing low, around $2353, will confirm a negative outlook, dragging XAU/USD to the next relevant support at the $2325 level. The downward trajectory could extend further, potentially testing the round figure of $2300.

On the opposite side, momentum above the $2400 mark is likely to face some resistance around $2415 before last week's swing high in the $2432 level. A sustained break beyond this would indicate that the corrective decline from the all-time high has run its course, paving the way for additional gains. Gold prices could then rise to intermediate resistance at $2469-2470 and challenge the record all-time high in the $2483-2484 zone.
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Tech in stress: Stocks fall, chipmakers rise amid AI debate

US stock indices ended trading mixed on Tuesday, with the S&P 500 and Nasdaq falling under pressure from weak chipmakers and tech giants, while the Dow Jones Industrial Average showed a slight increase.

Microsoft missed expectations

Tech giant Microsoft, considered a leader in artificial intelligence, ended the day down 0.89%, reaching $422.92 per share. The company's shares fell another 5% in after-hours trading as quarterly results for its cloud service Azure fell short of analysts' forecasts.

Nvidia and other chipmakers are losing ground

Shares in Nvidia, a recognized leader among the beneficiaries of AI growth and the second-largest player in the S&P 500, fell 7.04% to $103.73 per share. The decline had a negative impact on other chip companies, leading to a 3.88% decline in the Philadelphia Semiconductor Index.

Expectations from the giants' reports

This week, investors are eagerly awaiting reports from giants such as Apple, Amazon, and Meta Platforms. Apple shares rose slightly by 0.26%, reaching $218.80, while Amazon lost 0.81%, falling to $181.71. Meta Platforms also showed a decline of 0.54%, ending the day at $463.19. Investors are concerned about the valuation of these companies against the backdrop of the current economic situation.

"A lot of people are wondering right now how to profit from investing in artificial intelligence," said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.

Investors are choosing caution: high stock prices are in question

With expectations of a Fed rate cut growing, market participants are starting to question the fair value of stocks. "Companies are showing good financial results, but the main issue is how much their shares are worth. These are expensive securities, and investors should carefully evaluate their investments," the expert comments.

Indices: Dow Jones rises, Nasdaq falls

The Dow Jones Industrial Average (.DJI) rose 203.40 points, or 0.5%, to 40,743.33. At the same time, the S&P 500 (.SPX) fell 27.10 points, or 0.5%, to 5,436.44. The Nasdaq Composite (.IXIC) lost 222.78 points, or 1.28%, to end the day at 17,147.42.

Small Caps and Financials on the Rise

The Russell 2000 Small Cap Index (.RUT) rose 0.35%, while the S&P Value 500 (.IVX) rose 0.52%, helped by the Financials (.SPSY) index, which rose 1.19%. The gains are driven by a recent shift from more expensive stocks to less expensive ones, amid expectations that the Federal Reserve will cut interest rates this year, which is linked to slowing inflation.

Energy and financials lead, technology falls

The energy sector (.SPNY) rose 1.54%, the biggest gainer of all sectors. Financials also performed well, leading the S&P's list of 11 key sectors. Against this backdrop, the technology sector (.SPLRCT) fell 2.2%, the weakest on the day.

Continued sell-off: The impact of earnings

Last week's sell-off in mega-cap stocks, triggered by disappointing Tesla results and Alphabet's outlook for high spending, continues to weigh on the market. These events have heightened investor concerns, leading to a correction in stock prices and a decline in their appeal.

Market prepares for Fed decision: Expectations of rate cuts

Investors continue to hope for easing monetary policy from the US Federal Reserve. The policy meeting is on Wednesday, and the market is pricing in a small chance of a 25 basis point rate cut. However, according to CME's FedWatch tool, that scenario is looking very real at the September meeting.

Labor data expectations

Investors are focused on labor market data this week, culminating in the government's payrolls report on Friday. The Survey of Job Openings and Turnover on Tuesday showed 8.18 million job openings in June, beating economists' expectations of 8 million.

Failures and successes: The impact of corporate news

Among the companies whose shares fell, Procter & Gamble (PG.N) stood out, falling 4.84% to $161.70 after disappointing fourth-quarter sales data. Drug giant Merck (MRK.N) lost 9.81% to $115.25 after the company revised down its full-year profit forecast.

Cybersecurity was also in the spotlight, with CrowdStrike (CRWD.O) falling 9.72% to $233.65 on news of a compensation claim from Delta Air Lines (DAL.N) over the global cyber outage. Against this backdrop, shares of cybersecurity and cloud services company F5 (FFIV.O) rose 12.99% to $200.66 on a better-than-expected fourth-quarter earnings forecast.

Market Breakdown

On the New York Stock Exchange, advancing stocks outnumbered declining stocks by a 1.54-to-1 ratio. On the Nasdaq, the picture was less optimistic, with declining stocks outnumbering declining stocks by a 1.16-to-1 ratio. This reflects the current mood in the market, where investors continue to actively re-evaluate their portfolios amid uncertainty.

S&P 500 and Nasdaq: Highs and lows amid volatile market

The S&P 500 and Nasdaq Composite indices showed interesting results on Tuesday, with the S&P 500 hitting 73 new 52-week highs and one low, while the Nasdaq recorded 133 new highs and 126 lows. Trading volume on U.S. exchanges was 11.25 billion shares, slightly above the 20-day average of 11.19 billion shares.

Microsoft disappointment and the impact on the AI market

Microsoft's (MSFT.O) quarterly results were below expectations, wiping out about $340 billion in market value for the company and its rivals vying for leadership in artificial intelligence technology. Despite this, chipmakers such as Nvidia (NVDA.O) and others showed gains after Advanced Micro Devices (AMD.O) reported results.

The contrast between the chipmakers' gains and their biggest customers' declines highlights the disconnect in AI, with some investors wondering whether Wall Street's rally in AI has become too long-winded.

Expert Comment: Wealth Transfer in AI

Gil Luria, senior software analyst at DA Davidson, said: "Microsoft reported slower growth in its core cloud business but a significant increase in capital expenditures. This could be seen as a wealth transfer from Microsoft shareholders to Nvidia shareholders."

In its earnings call, Microsoft said revenue from its Intelligent Cloud division, which includes the Azure platform, rose 19% to $28.5 billion in the quarter ended June 30. However, that was below analysts' expectations of $28.7 billion, according to LSEG.

Thus, the current changes in market dynamics highlight the volatility and uncertainty in the technology sector, especially amid changes in demand for AI and cloud computing solutions.

AI Spending: Tech Giants Under Pressure

In the last quarter, Microsoft increased capital expenditure by 78% to $19 billion, including finance leases. This spending is related to the need to expand its global network of data centers to meet the growing demand for AI technologies.

Investors are looking forward to the results of significant investments in AI

Investors are very eager to see the results of significant investments in AI. Daniel Morgan, senior portfolio manager at Synovus Trust, said: "This has become a major concern. Stocks have risen strongly in the run-up to these reports." High expectations for tech companies have led to a jump in their share prices, which is now causing concern among investors.

High Stakes and Rising Costs

Rising AI costs added to concerns after Alphabet announced a significant increase in capital expenditures to support its generative AI technology. The higher-than-expected spending has raised concerns among investors who are concerned that the cost of building AI infrastructure could be higher than expected profits.

Amid high expectations for tech giants, analysts are forecasting that S&P 500 tech companies will increase their combined profits by nearly 10%, according to LSEG I/B/E/S.

Market Correction: Nasdaq Under Pressure

However, concerns about skyrocketing AI costs that aren't being matched by similarly strong revenues have dragged the Nasdaq down 8% from its record high close on July 10. This reflects the overall market sentiment, with investors continuing to closely monitor the tech sector, balancing expectations for strong revenues with the reality of the costs of developing new technologies.

Tech Stocks: Slip and Slip Ahead of Earnings

Ahead of Microsoft's earnings, the Nasdaq has slipped more than 1%, reflecting investor caution. Other major tech stocks have also come under pressure amid the decline. However, despite the overall negative backdrop, AMD has posted a 6% gain, thanks to an upbeat third-quarter revenue outlook based on strong demand for its AI chips.

Contrary trends: chipmakers on the rise

Among other AI-related chipmakers, Broadcom (AVGO.O) posted a 1.4% gain, while Intel (INTC.O) and Qualcomm (QCOM.O) also increased their market value, gaining almost 1% each. This suggests that despite the overall decline in the tech sector, the chipmaker segment continues to attract investor interest.

AI: Reality and Challenges

Rishi Jaluria, an analyst at RBC Capital Markets, noted: "We are still in a difficult macroeconomic environment. AI is indeed a significant factor, but it requires significant investment, which is clearly reflected in the capital expenditure numbers." This highlights the current challenges that companies face in the context of global economic uncertainty and the high costs of developing advanced technologies.
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Hot forecast for EUR/USD on August 1, 2024

The results of the Federal Open Market Committee meeting implied a significant rise in the dollar, but it never happened. The market continues to stagnate despite statements from Federal Reserve Chair Jerome Powell. He explicitly mentioned the need to begin easing monetary policy. However, he did not specify when this process would start. Although there is no doubt that interest rates will be lowered as early as September, the market was generally prepared for this development. Furthermore, according to preliminary estimates, inflation in the eurozone accelerated from 2.5% to 2.6% instead of slowing down to 2.3%. This creates a precondition for the European Central Bank to slow down the pace of interest rate cuts, contributing to the single European currency's strength. In other words, these factors somewhat balanced each other out.

Today, the focus will be on events unfolding in Europe. First, investors expect another interest rate cut from the Bank of England, which will support the U.S. dollar. Second, the eurozone is expected to see a sharp increase in the unemployment rate from 6.4% to 6.9%. Due to the scale of the change, this is likely to have the most significant impact. Therefore, despite Powell's statements yesterday, there are all the prerequisites for further strengthening of the dollar.

Despite a rich flow of information, the EUR/USD pair has not shown any speculative activity. The quote has formed a characteristic stagnation around the local low of the corrective cycle, as the support level of 1.0800 serves as a support.

On the 4-hour chart, the RSI indicator is moving in the lower area of 30/50, indicating that the bearish sentiment persists in the market.

Regarding the Alligator indicator on the same time frame, the moving average lines point downward, corresponding to a downward cycle.

Expectations and Perspectives
Subsequent price fluctuations within the 1.0800/1.0850 range are possible in this situation. When the price breaks out of either boundary of the established range, a major spike in speculative activity is expected.

Complex indicator analysis points to a stagnant phase in the short-term and intraday periods. The indicators are unstable.
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The Week Ahead on Wall Street: Economic Fears and Last Week

Buying Opportunities in a Falling Market

Despite the sell-off, some market participants saw a buying opportunity. Jonathan Golub, a strategist at UBS, noted in a note to clients that the market historically performs best when the VIX index widens, presenting a short-term investing opportunity.

Bearish Sentiment Prevails

Declining stocks outnumbered advancing stocks by nearly three to one on the New York Stock Exchange, 2.92 to 1, while the Nasdaq saw a 4.52 to 1 ratio. The S&P 500 posted 62 new 52-week highs and 15 new lows, while the Nasdaq Composite posted 34 new highs and 297 new lows.

Trading Volume and Earnings Expectations

Trading volume on U.S. exchanges reached 14.75 billion shares, well above the 20-day average of 11.97 billion shares.

Eyes on Earnings to Come

Investors will be watching earnings reports from giants like Caterpillar and Walt Disney next week, which will provide important insight into the health of the consumer and manufacturing sectors. Healthcare leaders including Eli Lilly are also expected to report, providing insight into the health of the pharmaceutical sector and its prospects.

Strengthening Safe Havens

With concerns mounting, investors have been flocking to safe haven bonds and other assets. The yield on the benchmark 10-year Treasury note fell to 3.79%, its lowest since December. This indicator moves inversely to bond prices, indicating increased demand for safe havens.

Stable Sectors in Popularity

Amid economic uncertainty, sectors traditionally considered stable have attracted increased attention. Investors have flocked to these areas in an attempt to protect their capital and minimize potential losses.

Sector Performance: Healthcare and Utilities on the Rise

Over the past month, the healthcare sector has posted a 4% gain, while utilities have risen more than 9%. These sectors have become safe havens for investors amid economic uncertainty. At the same time, the Philadelphia SE Semiconductor Index (SOX) has fallen nearly 17%, led by sharp losses in popular names like Nvidia and Broadcom.

Looking Ahead: Profit Taking or the Beginning of a Correction?

Some investors believe that the current data may simply reflect a desire to take profits after the market's significant rally in 2024. This approach does not exclude the possibility of further growth, but also indicates the possible beginning of a correction, especially in sectors that previously showed a confident rise.
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The main events by the morning: August 6

Goldman Sachs forecasts a rise in gold prices to $2,700 per ounce. Goldman Sachs Group analysts noted that long positions in gold currently represent the most valuable hedge among all commodities.

The average maximum deposit rate in the largest banks of the Russian Federation exceeded 17% per annum. This is the maximum since March 2022.

Rutube has more than doubled its audience over the past year. Experts believe that this is due, among other things, to the appearance of pirated content from Western majors on the platform.

There is a rebound on the Asian stock exchange. Japan's Nikkei index rose 10% after a record 13% drop on Monday.

The Ministry of Finance of the Russian Federation has increased oil revenues. The Ministry of Finance of the Russian Federation increased oil revenues by more than 60% in seven months compared to the same period last year.
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From sell-off to gains: stock indexes show positive dynamics

Markets recover from sharp decline
The S&P 500 and Nasdaq jumped 1% on Tuesday, showing a strong recovery from the recent sell-off. Investors began to actively buy stocks again, inspired by positive comments from Federal Reserve officials, which eased fears about a possible recession in the U.S.

Global growth and a return to risk
Equally on the day, stocks around the world began to recover from the aggressive declines the previous day. Amid this gain, U.S. Treasury yields increased and the dollar strengthened. Investors have returned to buying riskier assets despite lingering concerns about an economic slowdown.

Cooling Optimism
The Dow Jones Industrial Average also showed positive dynamics, but, like other major indices, it fell by the end of the trading day, falling short of the daily highs. This shows some caution among market participants despite the overall improvement in sentiment.

Fed calms markets
U.S. Federal Reserve officials issued statements rejecting the view that weak July employment data points to an approaching recession. However, they warned that lowering interest rates may be necessary to prevent a possible economic slowdown.

Rate cuts likely
Amid weak economic data, stocks were under pressure, fueling fears of a U.S. recession. According to CME Group's FedWatch tool, traders are pricing in the likelihood of a rate cut at the next meeting in September, with 75% expecting a 50 basis point cut and 25% expecting a 25 basis point cut.

S&P 500 Sectors Advance: The Day's Top Performers
All of the major sectors of the S&P 500 ended the day higher, with real estate and financials leading the way. Tech company Nvidia was a particular highlight, jumping nearly 4% to lead the gains for the S&P 500 and Nasdaq.

Investors Return to the Market
"The market has been oversupplied, but there's a significant recovery happening, particularly in the Nasdaq. Investors are starting to believe again that lower interest rates will be good for stocks," said Rick Meckler, a partner at Cherry Lane Investments, a family-owned investment firm in New Vernon, N.J.

Indices Are Rising
The Dow Jones Industrial Average gained 294.39 points, or 0.76%, to 38,997.66. The S&P 500 gained 53.7 points, or 1.04%, to 5,240.03, and the Nasdaq Composite gained 166.77 points, or 1.03%, to 16,366.86.

The Impact of Artificial Intelligence
The Nasdaq Composite has risen 9% in 2024, helped by strong earnings and a bullish outlook for AI. However, as Meckler noted, "while recent earnings have been good, they have fallen short of expectations in many cases." Market valuations remain high, with the S&P 500 trading at 20 times trailing 12-month earnings, according to LSEG, well above the long-term average of 15.7.

Expectations and Risks
Amid unexpected developments such as the Bank of Japan's recent rate hike, investors have begun to unwind the yen-denominated financing that has been used to buy stocks for years. This has added to market uncertainty and left many wondering about the outlook.

Awaiting Powell's Speech
One of the key events investors are watching is Federal Reserve Chairman Jerome Powell's speech at a symposium in Jackson Hole, Wyoming, scheduled for August 22-24. His words could influence future market moves and provide insight into the future of monetary policy.

Uber and Caterpillar Succeed
Uber shares soared 11%, beating Wall Street's second-quarter revenue and profit expectations. The company was able to show solid growth thanks to strong demand for its ride-sharing and food delivery services. Meanwhile, Caterpillar shares rose 3% as the company also beat analysts' forecasts despite weaker demand in North America. Rising prices for heavy equipment such as excavators helped offset those losses.

Trading Activity on the Rise
Trading volume on U.S. stock exchanges totaled 13.52 billion shares, above the 20-day average of 12.48 billion. Advancing stocks outnumbered declining stocks on the New York Stock Exchange by a 2.59-to-1 ratio, while the Nasdaq saw a 1.93-to-1 ratio.

Highs and Lows
The S&P 500 posted 12 new 52-week highs and seven new lows, while the Nasdaq Composite posted 31 new highs and 144 new lows. These figures highlight the continued volatile market, with gains and losses alike.

Oil Prices Rebounding
Oil prices also edged higher after falling to multi-month lows on Monday. Investors' attention has shifted to supply-side concerns, which, along with a recovery in financial markets, has eased concerns about future energy demand.

Nikkei recovery: relief after collapse
Tokyo's Nikkei index rose 10%, providing some relief after its 12.4% plunge on Monday. The drop was the biggest one-day sell-off in Japan since Black Monday in 1987, causing global investor jitters.

Fed: Slowdown, not recession
U.S. Federal Reserve officials on Monday dismissed speculation about a recession despite weak employment data for July. San Francisco Fed President Mary Daly stressed that current data suggest the economy is slowing, but not collapsing. She noted the importance of preventing a labor market crisis.

Global Markets Rise
The MSCI index, which tracks shares around the world, rose 8.91 points, or 1.17%, to 770.99, off its daily high of 777.81. That followed a more than 3% drop on Monday, marking the third straight day of losses for the global market.

European Markets Volatility
Europe's STOXX 600 index ended the session up 0.29%, despite earlier volatility, when it fell 0.54%. That underscores the nervousness among European investors trying to adjust to rapidly changing market conditions.

FX Market Jitters
On the FX front, the dollar strengthened against its major counterparts, while the Japanese yen hit seven-month highs against the US dollar. Some of the more dramatic moves of recent days have eased, and markets are beginning to feel a sense of calm again.

Dollar Strengthens Amid Currency Volatility
The dollar index, which tracks the dollar against major currencies including the yen and euro, rose 0.07% to 102.94. Against the Japanese yen, the dollar gained 0.4% to 144.74, while the euro weakened 0.2% to $1.093.

U.S. Treasury Yields Rise
U.S. Treasury yields rose as fears of a potential recession in the country proved overblown, dampening demand for safe-haven U.S. bonds.

The 10-year yield rose 12 basis points to 3.903%, while the 30-year yield rose 12.1 basis points to 4.1924%. The yield on 2-year bonds, which often react to changes in interest rate expectations, also rose to 3.9936%.

Oil prices recover
Oil prices have stabilized after falling on Monday. U.S. crude rose 0.36% to $73.20 a barrel, while Brent crude ended the trading session at $76.48 a barrel, up 0.24% from the previous day.

Precious Metals: Gold Loses Ground
With the dollar strengthening and bond yields rising, precious metals prices fell. Spot gold fell 0.82% to $2,387.88 an ounce. U.S. gold futures also fell 0.37% to $2,392.70 an ounce. However, expectations of a U.S. interest rate cut in September and ongoing tensions in the Middle East limited gold's losses, maintaining its appeal as a safe haven asset.
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Nasdaq in the red: weak bond auction, tech companies fall

Tech sector under pressure
The U.S. stock market closed lower on Wednesday, with the Nasdaq index losing 1%. The main reason was a decline in tech stocks, exacerbated by weak interest in the 10-year Treasury auction, which caused investor jitters amid volatile trading.

Morning gains turn to losses
Trading started on a positive note with tech giants rising, but both indexes began to lose ground as the day progressed. Investors, still jittery from the recent global sell-off in equities, added to the sell-off after a weak Treasury auction sent the market lower.

Red Zone: All Indexes Die
All three major indexes ended the day in the red, with losses widening just before the close. The tech-heavy S&P 500 (.SPLRCT) fell 1.4%, becoming the biggest drag on the benchmark index.

Recession Worries
Investors are worried about a possible U.S. recession, as well as weaker forecasts from major U.S. companies. These factors are weighing on the market.

Day's Results: Big Losses
The Dow Jones Industrial Average (.DJI) fell 234.21 points, or 0.6%, to 38,763.45. The S&P 500 (.SPX) lost 40.53 points, or 0.77%, to 5,199.5. The Nasdaq Composite (.IXIC) fell 171.05 points, or 1.05%, to 16,195.81.

Expert Opinions
Lindsey Bell, chief strategist at 248 Ventures in Charlotte, North Carolina, said investors may also have been taking profits after stocks rebounded Tuesday.

Big Losses
The Nasdaq and S&P 500 each lost at least 3% on Monday, underscoring the volatility of the current market environment.

Impact of Comments from Japan
Stocks received some support Wednesday after Bank of Japan (BOJ) Deputy Governor Shinichi Uchida said the central bank has no plans to raise rates amid volatile financial markets.

Nikkei surges after decline
Japanese stocks rose on the news. The Nikkei (.N225) rose 1%, extending a 10% rebound that began on Tuesday after a sharp decline on Monday. The Nikkei's sudden 12.4% decline triggered a global decline in equities as investors turned away from risky assets.

Japan rate hike fallout
The Bank of Japan's surprise rate hike on July 31 to a level not seen in 15 years triggered a sell-off in global markets. Investors began unloading their yen positions in a carry trade, sending the low-yielding Japanese currency, which is typically used to buy high-yielding assets, sharply higher.

Disappointing Corporate Results
Walt Disney Shares Slide
Walt Disney (DIS.N) shares fell 4.5% after the company warned of "moderate demand" for its theme parks in coming quarters.

Super Micro Computer Slide
Super Micro Computer (SMCI.O) shares tumbled 20.1% after the company reported lower-than-expected quarterly adjusted gross profit. Rival Dell Technologies (DELL.N) also fell 4.9%.

Market Expectations
Federal Reserve Eyes
Investors are eagerly awaiting further comments on monetary policy from the Federal Reserve, with particular attention focused on an event in Jackson Hole, Wyoming, where Fed Chairman Jerome Powell is scheduled to speak.

Trading Activity
Trading volume on U.S. exchanges on Wednesday was 12.93 billion shares, slightly above the 20-day average of 12.63 billion shares.

Declining Stocks Prevail
Declining stocks outnumbered advancing stocks on the New York Stock Exchange (NYSE) by 1.48 to 1. On the Nasdaq, the ratio was even more pronounced, with decliners outnumbering advancing stocks by 2.08 to 1.

Highs and Lows: Market Trends
S&P 500 and Nasdaq Performance
The S&P 500 posted 16 new 52-week highs and 9 new lows. The Nasdaq Composite posted 34 new highs and 195 new lows, putting the tech sector under significant pressure.

External Factors
Oil Price Rise
Oil prices rose on a bigger-than-expected draw in U.S. crude inventories and a possible escalation in the Middle East. However, investors continue to voice concerns about weak demand in China.

S&P 500 Volatility
Daily Performance
After a morning rally on Wednesday, the S&P 500 began to lose ground around midday and then fell further after the 10-year U.S. Treasury auction.

Profit Taking
Bell also noted that some investors are using short-term stock gains to take profits, adding to the volatility in the market.

MSCI falls, STOXX 600 rises
The MSCI World Share Index (.MIWD00000PUS) fell 0.35 points, or 0.05%, to 770.64, after hitting a session high of 783.83. Meanwhile, Europe's STOXX 600 (.STOXX) ended the day up 1.5%, reflecting positive momentum in European markets.

FX Markets: BoJ Statements React
Yen Falls
The Japanese yen weakened after the Bank of Japan's rate hike announcements, somewhat reassuring investors worried about the volatility of the Japanese currency. The yen strengthened sharply against the dollar on Monday amid concerns about a possible U.S. recession, sending markets falling broadly.

Strengthening dollar
The US dollar strengthened 1.75% against the yen, reaching 146.83. The dollar index, which tracks the greenback against a basket of currencies including the yen and the euro, rose 0.2% to 103.19. The euro, meanwhile, fell 0.08% to $1.0921.

Bond yields: An analysis of supply and demand
US Treasury yields rise
US Treasury yields rose after weak demand at a $42 billion auction of 10-year notes. Companies rushed to place their debt amid growing risk appetite. Traders are closely monitoring supply and awaiting more economic data to assess the health of the US economy.

Specifics
The 10-year Treasury yield rose 7 basis points to 3.958%, up from 3.888% late Tuesday. The 30-year yield also rose, adding 8.1 basis points to 4.2579%.

These moves highlight the current market sentiment, with investors seeking to balance risk and return amid economic uncertainty.

Two-Year Yields Decline
The two-year Treasury yield, which closely tracks interest rate expectations, fell 0.2 basis points to 3.9827%, down from 3.985% late Tuesday. The move reflects a slight softening in investor expectations for future Federal Reserve action.

Energy Markets: Oil Prices Rising
Oil Prices Strengthening
Energy markets are seeing a significant rise in oil prices. US crude oil rose 2.77% to $75.23 per barrel. Brent crude prices also rose, rising 2.42% to $78.33 per barrel. These changes come amid concerns about depleting reserves and a possible escalation of conflicts in the Middle East.

Precious Metals Market: Gold Prices Fall
Gold Price Decline
Precious metal prices declined. Spot gold lost 0.2% to $2,384.59 per ounce. US gold futures also fell, falling 0.05% to $2,387.80 per ounce. These changes may be related to fluctuations in currency markets and changing investor sentiment.

Results and Prospects
Markets continue to show volatility in response to changes in economic indicators and geopolitical risks. Investors are closely monitoring developments, trying to adapt their strategies to the new conditions. Interest rate expectations and rising oil prices play key roles in shaping market sentiment.
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New round of gains: Nasdaq, S&P 500 up 2% on US unemployment report

US stocks rally: S&P 500 and Nasdaq jump more than 2%
US stock markets surged higher on Thursday, with major indices including the Nasdaq and S&P 500 ending the day up more than 2%. The gains were driven by an unexpected drop in jobless claims, which eased concerns about a possible sharp slowdown in the labor market.

Rebound Across Sectors
All sectors of the S&P 500 gained, with the biggest gainers being technology (.SPLRCT) and communications services (.SPLRCL). Small-caps also saw strong gains, with the Russell 2000 (.RUT) up 2.4%.

Eli Lilly Rises
Among the top gainers was pharmaceutical company Eli Lilly (LLY.N), which soared 9.5% after the company raised its full-year profit forecast and sales of its popular weight-loss drug Zepbound topped $1 billion for the first time in a quarter.

Positive Labor Market Data
A larger-than-expected decline in jobless claims gave markets a boost.

Impact of Reports and Recession Fears
Last week, the US employment reports for July raised concerns about a possible recession, leading to a sharp decline in stocks. Traders also noted an unwinding of positions in the carry trade, a strategy in which investors borrow money from low-interest-rate economies to invest in high-yielding assets.

The market continues to react to macroeconomic data, and investors will be closely watching new data in the coming weeks to assess the state of the economy and possible prospects.

Dow Jones, S&P 500 and Nasdaq ended the day on a solid rise
US stock indexes ended the trading day with significant gains. The Dow Jones Industrial Average (.DJI) rose 683.04 points, or 1.76%, to 39,446.49. The S&P 500 (.SPX) rose 119.81 points, or 2.30%, to 5,319.31. Meanwhile, the Nasdaq Composite (.IXIC) rose 464.22 points, or 2.87%, to end the day at 16,660.02.

Volatility Declines: Wall Street Calms Down
The Cboe Volatility Index (.VIX), often called Wall Street's fear gauge, declined Thursday, suggesting that sentiment is stabilizing. However, experts caution that the current gains do not necessarily mean the market has bottomed out.

"Once volatility starts to rise, it takes a while for it to calm down," said David Lundgren, chief market strategist and portfolio manager at Little Harbor Advisors. He also added that the current growth does not guarantee an immediate continuation of the rise, but if we look at the three- to six-month horizon, the probability of above-average returns is quite high.

End of the earnings season: Investor expectations
As the second-quarter earnings season comes to an end, investors are eagerly awaiting the final results. There were some disappointments at the start of the reporting period, but the market remains focused on the latest data.

Under Armour surprises the markets
One of the most significant events of the day was the sudden rise of Under Armour (UAA.N) shares by 19.2%. The company pleased investors with a surprise first-quarter profit, which was the result of successful efforts to reduce inventory and promotions.

Trading activity: Moderate recovery
Trading volume on U.S. exchanges amounted to 11.98 billion shares, slightly below the average of 12.60 billion over the past 20 trading days. However, the market remains active, and participants continue to closely monitor further economic indicators and corporate reports.

Advances outnumber decliners on the New York Stock Exchange (NYSE) 3.59 to 1. The same was true on the Nasdaq, where for every decliner, there were 2.76 gainers. The S&P 500 has posted 7 new highs in the past 52 weeks, but also 4 new lows. Meanwhile, the Nasdaq Composite has posted 32 new highs, but 183 new lows.

Global Markets Strengthen on Better Unemployment Data
A closely watched global stock index jumped more than 1% on Thursday, helped by lower-than-expected U.S. jobless claims data. The results eased recession fears and helped lift Treasury yields and the dollar.

Oil Market Rises as Supply Concerns Outweigh Demand
Oil futures prices rose for a third straight day, led by rising supply risks in the Middle East, offsetting demand concerns that earlier this week sent prices to their lowest since early 2024.

Jobless Claims Drop Sharply in 11 Months
The Labor Department reported Thursday that initial claims for federal unemployment benefits fell by 17,000 to a seasonally adjusted 233,000 in the week ended Aug. 3. That was the largest decline in 11 months and below economists' forecast of 240,000.

Data Focus Amid Market Volatility
These jobless claims data are especially important following Friday's weaker-than-expected July jobs report, which triggered a slump in financial markets on Monday that affected not only the U.S. but also global markets. Amid such volatility, investors continue to watch economic data closely to gauge future market developments.

Markets on Edge: Investors Unwind Carry Trades
The recent market selloff was driven in part by investors unwinding their carry trades, a strategy that involves using cheap borrowing in Japan to buy dollars and other currencies that are then invested in higher-yielding assets. The unwinding of such trades sent Japanese stocks down 12% on Monday, followed by a 3% decline in the S&P 500 (.SPX).

Volatility Ahead: Uncertainties Rise
Experts warn that there could be more volatility ahead, and it won't just be driven by the seasonal weakness that is typical in August and September. Heightened geopolitical tensions in the Middle East, the upcoming US elections and economic data that the Federal Reserve will be watching closely are creating a high degree of uncertainty in the market. "The market doesn't like uncertainty, and we are in that period now," says Irene Tankel, chief US equity strategist at BCA Research.

European and global indices: modest gains amid volatility
While US markets faced turbulence, Europe's STOXX 600 index (.STOXX) closed with a modest gain of 0.08%. The MSCI Global Equity Index (.MIWD00000PUS) also showed positive dynamics, rising 11.40 points, or 1.48%, to 782.10.

FX: Dollar strengthens amid global uncertainty
In currency markets, the dollar index, which tracks the greenback against a basket of major global currencies including the yen and the euro, rose 0.09% to 103.20. The euro, by contrast, weakened slightly, falling 0.04% to $1.0917. Against the Japanese yen, the dollar strengthened 0.3% to 147.13.

Record volatility: Global markets on edge
Before Thursday, the global equity index had posted 16 days of gains or losses of more than 1% this year, while the S&P 500 had recorded 32 such moves. This highlights the record volatility that markets have seen this year, and investors should brace for more volatility in the coming months.

U.S. Treasury yields continue to rise on positive economic data
U.S. Treasury yields continued to rise on Thursday, helped by jobless claims data that bolstered confidence that the U.S. economy can avoid an imminent recession. The data supported expectations for economic resilience, pushing yields higher. In addition, weak demand at the 30-year bond auction added to the yields' upward movement, continuing a trend that began amid similarly weak selling of 10-year notes the previous day.

Yields Rising: Key Indicators
The yield on the 10-year U.S. Treasury note rose 2.1 basis points to 3.988%, up from 3.967% at the close of trading on Wednesday. The yield on the 30-year note also rose, adding 1.6 basis points to 4.2775%, up from 4.261% the previous day. Meanwhile, the yield on the 2-year note, which often reflects expectations for future interest rates, rose 2.9 basis points to 4.0297%, up from 4.001% the previous day.

Oil Markets: Oil Prices Continue to Rise Strongly
Energy markets also saw gains. U.S. crude oil rose 1.28%, or 96 cents, to $76.19 a barrel. European benchmark Brent crude settled at $79.16 a barrel, up 1.06% from the previous day.

Gold Shows Strong Gains
In the precious metals market, gold prices also continued to rise. Spot gold prices rose 1.78% to $2,423.87 an ounce. U.S. gold futures also showed positive dynamics, rising 1.25% to $2,420.50 an ounce.

Economic confidence boosts demand for assets
Rising Treasury yields and stronger oil and gold positions indicate continued optimism in the markets despite some economic concerns. Investors continue to seek assets that can protect them from potential volatility, and current economic data only strengthens their confidence in the resilience of the U.S. economy.
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S&P 500 Erases Losses: Week in Review and Wall Street Scenarios for Next Week

Markets Stabilize: S&P 500 Ends Week Little Changed
The S&P 500 stock index showed solid gains on Friday, managing to almost completely recoup losses suffered earlier in the week amid recession fears and a curtailment of global yen-financed trade. The market remained almost flat for the week, despite sharp fluctuations.

Technology Pulls Market Up
Technology was the biggest contributor to the S&P 500's gains on Friday, proving to be the engine that pulled the market out of the negative territory. Meanwhile, the Cboe Volatility Index, known as Wall Street's "fear gauge," fell sharply after a sharp jump earlier in the week.

Monday's swings and recession fears
The market had a particularly bad start to the week, with a sharp drop on Monday continuing the sell-off that began the previous week. Investors were spooked by a weaker-than-expected July employment report, raising concerns about a possible recession. In response, many began to close their carry trades linked to the Japanese yen.

Investors looking for a foothold
"Investors are trying to determine whether the market has bottomed out," said Robert Phipps, managing director at Per Stirling Capital Management in Austin, Texas. He said the market is in a period of high uncertainty, and participants are actively looking for signals for further action.

Fed Offers Confidence
The Federal Reserve said Thursday that slowing inflation is setting the stage for a possible rate cut in the future. However, they said any decisions would be based on current economic data, adding to the uncertainty.

Waiting for More Data
It's been a volatile week, with investors eagerly awaiting more data on inflation, corporate earnings, and presidential polls. These could be key factors in determining the direction of U.S. stocks and helping to smooth out the current market turbulence.

Market Volatility: U.S. Stocks on a Swing
The quiet months in U.S. stock markets have suddenly given way to bouts of volatility. Sharp price movements became a new reality for investors in August, driven by a string of worrisome economic data that coincided with the completion of a major deal financed by the Japanese yen. The deal triggered the biggest selloff in stocks this year. Despite recent recovery efforts, the S&P 500 remains 6% below its all-time high set last month, though it has rebounded from a dramatic plunge earlier in the week.

Recovery May Take Time
While the past few days have brought relief in the form of rising stocks, experts warn against expecting calm to return to markets anytime soon. Historical data on the Cboe Volatility Index, also known as Wall Street's "fear gauge," shows that periodic spikes in volatility can last for months. On Monday, the index posted its biggest one-day gain, indicating a high degree of anxiety among investors.

Wall Street's Fear Gauge: Echoes of Anxiety
The Cboe index measures demand for options, which provide protection against sharp market swings. When the index closes above 35, as it did on Monday, it takes about 170 trading sessions on average for the market to return to calmer levels. This is in line with the index's long-term median of 17.6, signaling significantly less anxiety among market participants.

New Test: Inflation Data
A new potential test for the market is on the horizon. On Wednesday, U.S. consumer price data will be released. If inflation shows too sharp a decline, it could fuel concerns that the Federal Reserve has made a mistake in leaving interest rates high for too long. This could lead to further market instability as investors worry that tight monetary policy will push the economy into recession.

U.S. stocks, which have been going through periods of ups and downs, are in a state of heightened anxiety, and there are no signs that this situation will change quickly. Investors continue to watch the new data closely, hoping for stability that so far seems out of reach.

Market ends week with minimal changes
Friday's trading ended with a slight increase in the main indices, which allowed them to compensate for some of the weekly losses. The Dow Jones Industrial Average added 51.05 points, which corresponds to an increase of 0.13%, and reached 39,497.54. The S&P 500 index rose by 24.85 points, or 0.47%, closing at 5,344.16. The Nasdaq Composite also showed positive dynamics, increasing by 85.28 points, or 0.51%, and ended trading at 16,745.30.

Weekly results: small losses against expectations
Despite the positive end of the week, the indicators for the week as a whole were in the negative. The S&P 500 fell 0.05%, the Dow Jones lost 0.6%, and the Nasdaq Composite slipped 0.2%. The current market situation reflects the nervousness of investors who are waiting for more signals from the Federal Reserve.

Waiting for the Fed's decision: What's next?
Michael James, managing director of equities at Wedbush Securities, notes that the market will remain in a state of heightened uncertainty until the next Federal Reserve meeting on September 17-18. The main focus of traders is on whether the Fed will decide to cut interest rates by 25 or 50 basis points. According to CME Group, the probability of a 50 basis point cut is estimated at 51%, while the probability of a softer 25 basis point cut is 49%.

Investors Await Inflation Data
In addition to the Fed's decisions, investors are eagerly awaiting consumer price and retail sales data for July, due out next week. These figures could provide a clearer picture of whether the U.S. economy will avoid a hard landing and provide direction for the market going forward.

Yearly Gains: Tech on the Rise
Despite recent wobbles, all three major indexes have continued to post strong gains since the start of 2024, helped by strong earnings from major tech companies and optimism around artificial intelligence. Stocks have shown strong gains early in the year, helping the market stay positive amid the overall turbulence.

Investors continue to watch the events unfold, awaiting more economic data and policy decisions to see where the market will head in the near future.

S&P 500 and Nasdaq Continue Strong Gains
The S&P 500 and Nasdaq have both posted impressive gains to end the year, up about 12% each since Dec. 31. The recent selloff in stocks has made tech stocks more affordable on a price-to-earnings basis, bringing them back into the spotlight.

The Day's Winners: Take-Two and Expedia
Friday's trading was marked by gains for individual stocks, particularly in the tech and entertainment sectors. Video game publisher Take-Two Interactive Software jumped 4.4% after forecasting higher net bookings in fiscal years 2026 and 2027. Meanwhile, online travel agency Expedia rose 10.2% after reporting quarterly earnings that beat analysts' expectations.

Trading Activity: What's Happening on the Stock Markets?
Trading volume on U.S. exchanges on Friday was 11.13 billion shares, slightly below the 20-day average of 12.59 billion. Advancing stocks outnumbered declining stocks on the New York Stock Exchange by a 1.39-to-1 ratio. However, the situation was slightly different on the Nasdaq, with decliners outnumbering gainers by a 1.14-to-1 ratio.

New Highs and Lows: Who's Leading the Way?
The S&P 500 posted 15 new 52-week highs and just three new lows, while the Nasdaq Composite was more mixed, with 52 new highs and 159 new lows. The data reflects continued uncertainty in the market despite the overall gains in the indices.

Market Expectations: Rate Cuts on the Horizon?
Futures markets are increasingly biased toward the Federal Reserve cutting its benchmark interest rate by 50 basis points at its next meeting in September. The probability of this scenario is estimated at 55%, a sharp change from the 5% chance recorded a month ago.

Economic Risks: A New Reality
Slower wage growth confirms that economic risks in the U.S. are becoming more balanced, especially against the backdrop of lower inflation and slower economic activity, said Oscar Munoz, chief U.S. macro strategist at TD Securities, emphasizing that the current economic environment requires special attention and caution from investors and analysts.

The market remains in a state of anticipation, and the coming months will show whether U.S. stocks can continue their rally or face new challenges.

Corporate Earnings Do Not Send Clear Signals to the Market
Corporate earnings for the second quarter did not have a significant impact on the market, leaving investors in uncertainty. Charles Lemonides, head of hedge fund ValueWorks LLC, said the results were neither strong nor weak enough to provide a clear direction for the market.

Solid Results: S&P 500 Meets Expectations
The S&P 500 reported results that were, on average, 4.1% above analysts' estimates. That's close to the long-term average of 4.2% above expectations, according to LSEG. While the results suggest stability, they haven't significantly changed market sentiment.

Earnings to Watch: Walmart, Home Depot, Nvidia
Investors will be focused on earnings next week from giants like Walmart and Home Depot, which could provide insight into how U.S. consumers are coping with the effects of a prolonged period of high interest rates. Also expected by the end of the month is earnings from chip giant Nvidia, whose shares have already risen an impressive 110% year-to-date despite recent market wobbles.

Jackson Hole Meeting: Key Event for the Fed
The Federal Reserve's annual meeting in Jackson Hole, scheduled for August 22-24, will be a key venue for monetary policy discussions ahead of the Fed's September meeting. The event is attracting investors' attention because it could provide insight into the regulator's next steps amid ongoing economic uncertainty.

Volatility as a Signal to Action
Lemonides, an investment expert, believes that recent market volatility is a natural and healthy correction in a strong bull market. He sees it as an opportunity for strategic investing and recently began building positions in Amazon.com, betting on a recovery from the recent weakness in its shares.

Political Uncertainty Rises
The U.S. presidential race is also adding uncertainty to the market. According to an Ipsos poll released Thursday, Democratic candidate Kamala Harris leads Republican Donald Trump 42% to 37% in the upcoming November 5 election. Political instability will certainly be a factor in investor sentiment in the coming months.

Investors continue to monitor developments, waiting for new data and signals that will help determine the future direction of the markets.

Kamala Harris Enters the Presidential Race
Vice President Kamala Harris officially entered the presidential race on July 21, after President Joe Biden ended his campaign following a poor performance in the June 27 debate against Donald Trump. The decision significantly changed the political landscape, adding intrigue to the race.

Election Turbulence: Markets Anticipate More Twists
With three months to go until the November 5 election, investors are bracing for more surprises in what has already been a dramatic election year. According to JPMorgan analysts, the early stages of the campaign provided a clearer picture of the likely outcome of the presidential and congressional elections, but recent events have once again thrown the outcome into doubt.

Election Volatility: Experts' View
Chris Marangi, co-chief investment officer at Gabelli Funds, predicts that the presidential race will inevitably lead to increased volatility in financial markets. However, he believes that the expected rate cuts in September could cause capital to rotate into sectors of the market that have been lagging amid the dominance of Big Tech.

"We expect volatility to increase during the election period, but at the same time, we expect the market to continue to rotate as lower rates offset economic weakness," Marangi said.

Political and Economic Uncertainty: What's Next?
The election year has already become one of the most unpredictable in recent memory, and investors continue to closely monitor political events, trying to assess their impact on the economy and markets. As November approaches, volatility is likely to only increase, adding new challenges for all market participants.
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Awaiting CPI: How Wall Street is preparing for the next round of events

Wall Street ends trading session with mixed results as investors await key economic data
Wall Street ended trading mixed on Monday as market participants prepared for important economic data to be released this week. Investors are particularly focused on the upcoming U.S. consumer price data, which will determine the future course of the Federal Reserve's monetary policy.

Indexes mixed
The Dow Jones Industrial Average lost ground, while the benchmark S&P 500 and tech-heavy Nasdaq Composite ended modestly higher. Meanwhile, the Russell 2000 index of smaller companies fell 0.9%.

Popular rotation is losing momentum
"The recent trend of investors to switch to smaller companies like the Russell 2000, cyclicals and financials has already begun to wane," said James Abate, chief investment officer at Centre Asset Management in New York. He said current economic conditions are not conducive to sustained earnings and stock price growth.

Focus on Consumer Prices and Retail Sales
Investors are looking ahead to the U.S. consumer price index (CPI) this week, due on Wednesday. The data is expected to show inflation accelerating 0.2% in July from June, with the annual inflation rate remaining at 3%.

Market participants are also focused on reports from major retailers, which will help gauge current consumer demand.

Rate Forecasts: What the Market Expects
The consensus in the money market is that the Fed could cut interest rates by 25 or 50 basis points as early as September. According to CME's FedWatch tool, a total monetary easing of 100 basis points is expected by the end of 2024.

Investors Await Retail Sales Data: Potential Impact on the Economy
Investors will be focused on the US retail sales report for July on Thursday. While expectations point to a modest increase, any weakness in the data could reignite concerns about slowing consumer demand and even the possibility of a recession.

Walmart and Home Depot earnings under scrutiny
Big retailers like Walmart and Home Depot are also set to report earnings in the coming days. The results will be closely watched by analysts and investors as they provide an important indicator of the health of the consumer market amid rising unemployment.

Market Risks: Inflation and Consumer Sentiment
James Abate, chief investment officer at Centre Asset Management, warns that a surprise rise in inflation that exceeds expectations could seriously disappoint the market. He says retail earnings are especially important now given recent signs of labor market trouble.

Indices mixed
The trading session ended mixed, with the S&P 500 up 0.23 points to 5,344.39 and the Nasdaq Composite up 35.31 points, or 0.21%, to 16,780.61. Meanwhile, the Dow Jones Industrial Average fell 140.53 points, or 0.36%, to close at 39,357.01.

Starbucks on the rise, KeyCorp attracts investors
Starbucks shares soared 2.58% after reports that activist investor Starboard Value, which holds a stake in the company, is pushing for measures aimed at boosting the coffee giant's stock.

KeyCorp also posted a strong gain of 9.1% after Canadian bank Scotiabank announced it had acquired a minority stake in the U.S. regional lender for $2.8 billion.

Hawaiian Electric's Future in Doubt
Meanwhile, Hawaiian Electric shares plunged 14.45% as the utility expressed concerns about its ability to continue operating amid mounting financial difficulties.

Equity Market: Declines Prevail, but Volatility Eases
Trading on the New York Stock Exchange (NYSE) and Nasdaq ended with decliners dominating. On the NYSE, the ratio of decliners to gainers was 1.46 to 1, while on the Nasdaq, the ratio was even higher at 1.54 to 1.

New Highs and Lows: Daily Stats
The S&P 500 posted 10 new 52-week highs and 7 new lows, while the Nasdaq Composite posted 51 new highs and 179 new lows. These figures show that despite the overall decline, there are still some growth points in the market.

Soothing Volatility: Markets Try to Stabilize
While volatility in the markets has eased significantly since last week, when U.S. stocks suffered a sharp decline, nervousness among investors may persist for some time. The panic flare-up appears to have died down, but history shows that markets can remain under pressure for months.

Cboe Volatility Index Returns to Normal
The Cboe Volatility Index, commonly known as the VIX and often referred to as the "fear index," has stabilized near 20 after hitting a four-year high last week. That's down from its recent peak of 38.57 on August 5. The rapid decline in the VIX is a sign that the sharp moves in the market were driven by short-term factors, such as the unwinding of highly leveraged positions, rather than fundamental issues related to the state of the global economy.

Bet on Stability: Short-Term Factors Dominate
Many market participants see the dissipation of fears as further confirmation that the recent collapse was driven by technicals, including the unwinding of leveraged positions and carry trades financed by the Japanese yen. Investors are confident that these factors are temporary and do not point to deeper structural problems in the global economy.

Markets Remain Tense: VIX Volatility as an Anxiety Indicator
Despite the recent decline in the VIX volatility index, history shows that markets can remain in a state of heightened anxiety for months after a sharp decline. Episodes where the VIX has risen above 35 are usually followed by a prolonged period of investor caution, which dampens the risk-taking that had previously fueled asset prices.

Volatility Takes Time to Normalize
According to experts, after the VIX reaches a level above 35, which is often associated with a high degree of anxiety among market participants, it takes about 170 trading sessions on average for the index to return to its long-term median of 17.6. This highlights that even after an initial calm, markets can remain volatile for a long time.

Investors Are Temporarily Calmed, But Anxiety Remains
J.J. Kinahan, CEO of IG North America and president of online broker Tastytrade, said: "Once the VIX stabilizes in a range, investors begin to feel more relaxed again. However, shocks like the current one usually linger in the memory for six to nine months, maintaining a heightened sense of caution."

The S&P 500's Long Rise
The recent turmoil in the U.S. stock market has come after a long period of stability and growth. The S&P 500 has risen 19% for the year, hitting a record high in early July. However, the rally has proven to be unsustainable: poor earnings reports from several major tech companies in July triggered a massive sell-off, sending the VIX rising from the low end of the tens of points to higher levels.

Unexpected BOJ Action Adds Volatility
The crisis deepened in late July and early August when the BOJ unexpectedly raised interest rates by 25 basis points. The move hurt carry traders who had borrowed cheaply in Japanese yen to invest in high-yielding assets such as U.S. tech stocks and Bitcoin.

Fast Fall and Rebound: Positional Risk Dominates
Mandy Xu, head of derivatives research at Cboe Global Markets, said the sharp market decline followed by an equally rapid rebound suggests that the current gyrations are largely due to position unwinding and risk shifting among market participants.

Volatility Isolated: Equities and FX Under Pressure
Mandy Xu, head of derivatives research at Cboe Global Markets, stressed that recent spikes in volatility, such as the one seen on August 5, have been concentrated in equities and FX. She noted that other asset classes, such as interest rates and credit, have not seen a significant increase in volatility, suggesting that the current swings are limited.

Investor Jitters: Awaiting Key Data
With uncertainty still looming, investors have every reason to be nervous in the coming months. The biggest worry remains economic data due out of the US. The consumer price report due out later this week will be a key indicator of whether the economy is facing a short-term slowdown or heading for a more serious slowdown.

Political Tensions Add to Uncertainty
Political uncertainty is also adding fuel to the fire. With the US elections in November and tensions rising in the Middle East, investors remain on edge as they watch for developments that could significantly impact the market.

Awaiting Inflation and Retail Earnings Data
Investors will be focused on the CPI data due out on August 14. In addition, earnings reports from giants like Walmart and other major retailers this week could be key to shaping market sentiment. Mark Hackett, head of investment research at Nationwide, said these data could have a decisive impact on investor behavior.

Emotional reactions in the market: forecasts and risks
"It is not surprising that in light of recent events, investors may overreact to inflation data, retail earnings and retail sales," Hackett said. In the current emotional environment, any deviations from expectations could cause significant volatility.
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