To The Moon

On the first day of trading in August (01 August), we saw the trading session ended with lows, this also push the major indices to post significant declines.

NASDAQ dropped more than 2% with -2.30% marking its sharpest loss since 24 July. The DJIAfell 1.2%, led by Boeing (BA), and the S&P 500 slumped 1.4%, with the Information Technology sector falling 3.4%.

Investors reacted to a rise in weekly initial jobless claims to 249K and the U.S. PMI Manufacturing Index falling into contraction territory.

Disappointing Economic Data Trigger Growth Concerns

Market was presenting downside bias, this is after the disappointing economic data which trigger growth concerns.

Weekly Initial Claims came in at 249K higher than consensus of 233K with previous at 235K. Weekly Continuing Claims was higher at 1.877 million after previous was revised to 1.844 million from 1.851 million. The key takeaway is the rising level of initial claims, suggesting a softening labor market expected to reduce discretionary spending.

July S&P Global US Manufacturing PMI - Final: 49.6; Prior 49.5. July ISM Manufacturing Index: 46.8% (consensus 48.5%); Prior 48.5%. The key takeaway is the clear weakness in the manufacturing sector, a byproduct of subdued demand.

June Construction Spending: -0.3% (consensus 0.1%); Prior was revised to -0.4% from -0.1%. The key takeaway is that construction spending was soft across both private and public sectors, reflecting weaker demand patterns as part of a softening economy.

Higher Q2 Productivity Growth and Moderation in Unit Labor Costs Give Slight Comfort

Q2 productivity growth was higher than expected at 2.3% (consensus 1.7%) while the previous was revised to 0.4% from 0.2%.

Q2 Unit labor cost growth was smaller than expected at 0.9% (consensus 1.7%) while previous was revised to 3.8% from 4.0%. The key takeaway is the moderation in unit labor costs, closely watched by the Fed. Unit labor costs increased 0.5% over the last four quarters, the lowest rate since Q3 2019.

Friday July Employment Situation report and June Factory Orders To Watch

We will be expecting the July Employment Situation report to be released at 8:30 Eastern Time on Friday 02 August). We will also be expecting June Factory Orders at 10:00 Eastern Time.

Market participants will focus on the July Employment Situation report and its implications for Fed policy.

Note Yield Lower Amidst Growth Concerns

Note yield ended lower because of the influence growth concerns have over the bond markets. The equity market was also affected.

10-year note yield went down 53 basis points to 2.982% and 2-year note yield fare worse with 108 points down to 4.158%.

Rate-Sensitive Sectors Benefit

S&P 500 rate-sensitive sector like Utilities and Real estate was boosted by the drop in yields with growth concern. Utilities led the pack with +1.85% followed by Real Estate with +1.58%.

Due to rise in Meta Platforms shares with increased by more than 4%, the communication services managed to outperform with a +0.89% gain.

The sectors with the largest declines came from information technology with -3.36% because of the weakness in the semiconductor space. This has caused PHLX Semiconductor Index (SOX) to close 7.1% lower.

Stocks To Watch

Intel (INTC) shares tumbled 10.5% in extended trading after the semiconductor giant offered weaker-than-expected guidance for the coming quarter. The company announced it would cut 15% of its workforce and suspend its dividend.

Intel expects third-quarter revenue between $12.5B and $13.5B, significantly below the $14.39B analysts anticipated. The company also projects an adjusted loss of $0.03 per share, compared to the $0.30 per share in adjusted earnings analysts expected. AMD (AMD) and Nvidia (NVDA) also saw declines in sympathy with Intel's results and guidance.

There is weakness persist in the semiconductor space until near end of August 2024 when we expect Nvidia to release their quarterly report.

$Amazon.com(AMZN)$ reported Q2 GAAP EPS of $1.26, beating estimates by $0.23. Despite a revenue miss, with $148B falling short by $760M, the company saw significant growth in its AWS segment, which increased 19% year-over-year to $26.3 billion. Amazon's North America segment sales grew by 9% year-over-year to $90.0 billion, while international segment sales increased by 7% to $31.7 billion. For Q3 2024, Amazon anticipates net sales between $154.0 billion and $158.5 billion, slightly below the consensus of $158.33B.

We saw AMZN down 7% in after hours trading so this might show investors confidence have been eroded and we could see more downside on the technology stocks and mega cap stocks.

$Meta Platforms, Inc.(META)$ shares rose following stronger-than-expected Q2 results, despite major U.S. equity averages selling off due to soft economic data.

This show that META still have the investors support and confidence despite the concern over growth.

Coinbase (COIN) reported Q2 GAAP EPS of $0.14, missing estimates by $0.78, but its revenue of $1.45B, up 104.8% year-over-year, beat estimates by $90M. The company reported adjusted EBITDA of $596 million and made significant progress in diversifying its revenues, with subscription and services revenue reaching nearly $600 million.

COIN was up for more than 3% after the earnings, and it has helped the other crypto stocks as well. I will be looking out for stocks like $Marathon Digital Holdings Inc(MARA)$ today (02 August 2024).

Looks like we are expecting a reversal to the bullish side for COIN and this should helped to push the crypto stocks as well.

Summary

I am expecting negative bias again as Apple and Amazon has both declined after their earnings. Crypto stocks might be coming into focus.

Semiconductor stocks could still be in weakness today (02 August).

Appreciate if you could share your thoughts in the comment section whether you think 02 August would be into negative bias again as investors are grappling with the growth concern.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.