1. Stocks rebounded after their worst week since April. The megacap space rallied, with the Nasdaq 100 up 1.5%. Despite the recent slump that had some on Wall Street bracing for a summer correction, respondents to a survey expect earnings to reinvigorate the S&P 500. Sky-high valuations and seasonal weakness have incited some pullback warnings, with traders also facing political uncertainties. The ultimate direction of the S&P 500 will still be determined by economic growth. After driving the rally in U.S. stocks for most of the year, Big Tech slammed into a wall last week. Investors rotated from high-flying megacap shares to riskier, lagging parts of the market, spurred by bets on Fed rate cuts and the threat of more trade restrictions on chipmakers. Still, the recent outperformance of U.S. small caps is facing technical resistance and lacks fundamental drivers to carry on for a longer period. Hedge funds aggressively cut risk across their long and short books and at the fastest pace since January 2021, according to a note by Goldman Sachs Group Inc.’s prime brokerage desk. From a net flow perspective, last week’s notional net selling in U.S. single stocks was the largest since March 2022. Nine out of 11 sectors were net sold — led by information technology, health care, financials and energy.
2. The correlation between the Japanese Yen and the price of gold is back, and a rising yen could be very positive for the yellow metal, according to Market Analyst Konstantin Oldenburger at CMC Markets. “Last Thursday, the Bank of Japan may have intervened in the currency market to support the battered yen,” he wrote. “This kind of intervention could be made easier in future with a possible change in U.S. monetary policy from the Federal Reserve.” Oldenburger said that equities in particular benefit during periods of rising or high interest rates because liquidity returns to the USD. When interest rates fall, this liquidity flows out of the dollar and moves into alternative investment opportunities worldwide. The yen could now benefit from this redistribution. Following the release of U.S. CPI for June last Thursday, USD/JPY fell by over 2%, with rumors circulating that Japan’s Ministry of Finance had intervened. Oldenburger noted that gold has consolidated between $2,431 and $2,290 per ounce over the last three months. “Since early July, investors have attempted to break above this range, which could push prices towards $2,700,” he said. “Conversely, if gold falls below $2,290, it may correct further to $2,220 and $2,189.”
3. The Nasdaq led U.S. stocks lower on Wednesday after lackluster Alphabet and Tesla earnings stirred up worries that Big Tech’s power to fuel gains is fading. The benchmark S&P 500 tumbled about 1.7%, and the Dow Jones Industrial Average dropped about 0.8%. The tech-heavy Nasdaq Composite led the losses, falling nearly 3%. Stocks are sinking as investors digest mixed quarterly earnings from Google parent Alphabet and Tesla, the first of the “Magnificent 7” megacaps to report. EV maker Tesla’s stock price slid more than 10%, while Alphabet shares dropped nearly 5%. Chip stocks also tumbled on Wednesday as Nvidia fell roughly 5% while Broadcom and Arm each dropped 6%. Investors are bracing for the next wave of earnings to flood in, with Chipotle, Ford and IBM due to post results after the bell on Wednesday.
4. Luxury carmaker Porsche expects the transition to electric vehicles to take longer than it thought, it said on Monday, having previously said its aim was for 80% of sales to be all-electric by 2030. It has now watered down that goal by tying it explicitly to customer demand and developments in the electromobility sector, saying in a statement only that it could now deliver on the 80% target if those factors warrant it. “The transition to electric cars is taking longer than we thought five years ago,” Porsche said in a statement. Executives at carmakers from Mercedes-Benz to Renault have warned in recent months that goals they set in recent years for fully electric sales in the next decade were too ambitious as customers remained reticent to make the switch away from gas-powered cars. Porsche, struggling with low EV sales this year so far, highlighted the disparity in its three key markets in EV uptake, with demand far ahead in China, slower in Europe and spotty in the U.S. “Our double strategy is more important than ever,” Porsche said, referring to its continued development of both combustion engines and electrified cars.
5. U.S. existing home sales fell more than expected in June as the median house price set another record high, but improving supply and declining mortgage rates offered hope that activity could rebound in the months ahead. Home sales dropped 5.4% last month to a seasonally adjusted annual rate of 3.89 million units, the lowest level since December, the National Association of Realtors said on Tuesday. Economists polled forecast home resales to slip to 4.00 million units. Home resales, which account for a large portion of U.S. housing sales, declined 5.4% on a year-on-year basis in June. The median existing home price soared 4.1% from a year earlier to an all-time high of $426,900, the second straight month it scaled a record high. Home prices increased in all four regions. Home resales are counted at the close of a contract. Sales in June likely reflected contracts signed in the prior two months, when the average rate on the popular 30-year fixed-rate mortgage was above 7.0%.
6. In the week ending July 20, the advance figure for seasonally adjusted initial claims was 235,000, a decrease of 10,000 from the previous week’s revised level. The previous week’s level was revised up by 2,000 from 243,000 to 245,000. The 4-week moving average was 235,500, an increase of 250 from the previous week’s revised average. The previous week’s average was revised up by 500 from 234,750 to 235,250.
7. U.S. crude fell more than 2% on Friday and is on pace for a third weekly decline as worries about demand in China outweigh strong economic growth in the U.S. West Texas Intermediate oil is down 4.2% this week, while Brent is 2.3% lower. The economy grew at a 2.8% pace in the second quarter, much stronger than expected. But oil imports to China were down 10.7% year over year in June, and refined product imports fell 32% during the same period, according to customs data. China is the world’s largest crude importer. At the time of writing, West Texas Intermediate September contract: $76.51 per barrel, down $1.77, or 2.26%. Year to date, U.S. oil has gained 6.8%. Brent September contract: $80.57 per barrel, down $1.80, or 2.19%. Year to date, the global benchmark is ahead 4.6%.
8. EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the U.S. Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
9. USD/JPY is consolidating its rebound near 154.00, having reversed the Tokyo CPI data-led slide to 153.40. The pair stays volatile, as the BoJ-Fed policy divergence remains in play while markets reposition ahead of the top-tier U.S. PCE inflation data due later Friday.
The U.S. economy grew at a faster than expected pace in the second quarter. The Bureau of Economic Analysis’s advance estimate of second quarter gross domestic product (GDP) showed the economy grew at an annualized pace of 2.8% during the period, well above the 2% growth expected by economists surveyed. The reading came in higher than first quarter GDP, which was revised down to 1.4%. Meanwhile, the “core” Personal Consumption Expenditures index, which excludes the volatile food and energy categories, grew by 2.9% in the second quarter, above estimates of 2.7% but significantly lower than the 3.7% gain in the prior quarter. The data’s release comes as investors try to gauge when the Federal Reserve will start cutting interest rates and if the central bank can achieve a soft landing, where inflation comes down to its 2% target without a significant economic downturn. Entering Thursday, markets had priced in a 100% chance the Fed would cut rates by the end of its September meeting.
Google parent Alphabet kicked off Big Tech’s earnings season on Tuesday, giving Wall Street its first look at digital ad and cloud spending in the quarter. Alphabet also continues to spend billions building out its AI infrastructure, with capital expenditures in the second quarter topping $13 billion, up from $12 billion in Q1. The report sets the tone for the rest of the tech industry, as it prepares to provide Wall Street with the latest on not just AI spending, but also how much that spending is paying off in actual revenue. CEO Sundar Pichai sidestepped a more direct question about when analysts can expect to start seeing a return on capital investments related to AI, saying that the spending is necessary for a long-term bet like AI, adding that in situations like this it’s better to overinvest rather than underinvest and fall behind. Alphabet is just the first of the Big Tech names set to report their earnings this quarter, and you can all but guarantee investors will be searching for clues as to how those other companies’ AI moves are paying off as well.
Nearly a week after a massive IT outage shut down computer systems around the world, cybersecurity company CrowdStrike issued a statement Thursday revealing that a single software update was responsible for grounding planes, curtailing hospital procedures, and closing businesses for days. The announcement came as most companies returned to business as usual. But it points to the vulnerability of our modern internet infrastructure and how taking out even a relatively small number of devices, Microsoft estimates 8.5 million systems were affected — can impact our lives. And without a broader plan to address the matter, another widespread outage is all but guaranteed to happen. CrowdStrike says it’s responding to the matter by reworking how it prepares its software updates, including more stringent testing and staggering deployment to prevent a global systems collapse in the future.
Volatility should be expected to remain high as investors will be closely watching for hints on upcoming monetary policy direction.
Many investors have redoubled their efforts to ensure that their portfolios are sufficiently diversified in the hopes that they will be able to withstand corrections in multiple market sectors. Many of these investors have included physical precious metals as part of their diversification plans, given their long history as a hedge against both inflation and during times of economic turmoil. Remember, the key to profitability through the ownership of physical precious metals is to own the physical product and hold it for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long run.
Trading Department – Precious Metals International Ltd.
Friday to Friday Close (New York Closing Prices)
| July. 19, 2024 | July. 26, 2024 | Net Change | ||
| Gold | $2,399.19 | $2,383.50 | -15.69 | -0.65% |
| Silver | $29.14 | $27.81 | -1.33 | -4.56% |
| Platinum | $964.60 | $935.50 | -29.10 | -3.02% |
| Palladium | $913.14 | $899.80 | -13.34 | -1.46% |
| Dow | 40287.43 | 40589.34 | 301.91 | 0.75% |
Previous Year Comparisons
| July. 28, 2023 | July. 26, 2024 | Net Change | ||
| Gold | $1,959.72 | $2,383.50 | 423.78 | 21.62% |
| Silver | $24.33 | $27.81 | 3.48 | 14.30% |
| Platinum | $937.86 | $935.50 | -2.36 | -0.25% |
| Palladium | $1,248.67 | $899.80 | -348.87 | -27.94% |
| Dow | 35485.96 | 40589.34 | 5103.38 | 14.38% |
Here are your Short-Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
| Support | 2368/2336/2278 | 27.28/26.50/25.71 |
| Resistance | 2458/2515/2548 | 30.83/32.41/33.40 |
| Platinum | Palladium | |
| Support | 935/907/861 | 879/853/801 |
| Resistance | 1008/1055/1082 | 957/1009/1035 |