To The Moon

Last Week's Recap

The US Market - A big rotation continued with mega-cap tech stocks sell-off

• A big rotation with the $S&P 500(.SPX)$ after hitting fresh record highs early in the week. The Dow and Russell 2000 had strong gains, but came off mid-week peaks.

• The $NASDAQ(.IXIC)$ fell 2.77% on Wednesday, suffering its worst one-day loss since 2022. The S&P 500 and Nasdaq weekly slipped 1.97% and 3.65%, respectively, marking their biggest weekly losses since April.

• Half of the $DJIA(.DJI)$ ’s 30 constituents ended the week with a gain. UnitedHealth Group (UNH) led the way with a 10.5% gain. However, mega-cap technology stocks dragged the Dow.

• Gold $Gold - main 2408(GCmain)$ price hit a record high of $2488.8 earlier this week.

• President Joe Biden on Sunday dropped out of the 2024 presidential race and endorsed Vice President Kamala Harris as the Democratic Party’s nominee, bowing to weeks of growing pressure by his own party members to quit his re-election bid against former President Donald Trump.

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The US Sectors & Stocks - Tech sector crashed by 5.3%

• The technology sector led the S&P 500 lower with a 5.3% loss for the week. Despite the decline, five defensive sectors were up, including real estate and financial. Health care, normally deemed a defensive player, also dropped, as $Eli Lilly(LLY)$ tumbled.

• A $CrowdStrike Holdings, Inc.(CRWD)$ update glitch caused a global IT outage early Friday via Microsoft (MSFT) cloud servers, causing massive disruptions worldwide. CrowdStrike says it wasn't a cyberattack, and deployed a fix. However, CRWD stock plunged more than 10% on Friday, adding to a big weekly sell-off. Some cybersecurity rivals rose.

• Chip-equipment giant $ASML Holding NV(ASML)$ beat second-quarter estimates but guided low on Q3 sales. ASML crashed 17.5% to drag the semiconductors. Geopolitical concerns also savaged semiconductor stocks. TSMC (TSM) also tumbled 11.5%, despite the world's largest contract chipmaker topping estimates for Q2 and guiding above views for Q3.

• $Netflix(NFLX)$ topped estimates of both revenue and EPS, and it added 8.05 million subscribers in the second quarter. For Q3, Netflix guided up on EPS but slightly lower on revenue.

• $Goldman Sachs(GS)$ and Morgan Stanley (MS) topped Q2 views. Goldman reported a 180% earnings jump, helped by easy comparisons, with net revenue rising 17% to $12.73 billion. Morgan Stanley delivered a 47% EPS gain on a 12% revenue rise. However, net interest income fell 17% for the quarter. GS stock rose to help the Dow's gain. But MS stock fell.

• $Roche Holding Ltd(RHHBY)$ surged after the drugmaker said patients who took its oral obesity treatment for four weeks lost 6.1% more body weight than placebo recipients. The news hit Eli Lilly (LLY) and Novo Nordisk (NVO), they lost nearly 10% and 7%, respectively.

• $UnitedHealth(UNH)$ topped second-quarter estimates and the stock surged to record highs. Analysts see UnitedHealth as best-positioned to capitalize on Medicare Advantage growth.

• Bitcoin hit $66,500 on Friday and rose nearly 15% for its best week since March 1. Crypto-related stocks rallied for the week. $Coinbase Global, Inc.(COIN)$ and $MicroStrategy(MSTR)$ jumped by 18% and 27%, respectively.

• $Berkshire Hathaway(BRK.B)$ sold about $1.5 billion of $Bank of America(BAC)$ stock during July 17-19, dropping its stake in the banking giant to a still sizable $42.9 billion, according to a filing late Friday.

Hong Kong Market - $Hang Seng Index - main 2407(HSImain)$ tumbled 4.79%

• Hong Kong Stocks slipped to close the week in the red with investors now waiting for further details about the government's fiscal reform to boost the economy while facing geopolitical tensions. The Hang Seng Index tumbled 4.79% to 17,417.68。

• According to Goldman Sachs, to achieve an 'around 5% growth rate', more measures are required to ease the pressure so that the demand may start to rise again; fiscal and housing fronts were especially underscored by the report.

• Hong Kong's seasonally adjusted unemployment rate stood at 3.0% in the second quarter of 2024, unchanged from the March-May figure. The unadjusted unemployment rate also stayed the same across the two periods at 1.2%.

Singapore Market - $Straits Times Index(STI.SI)$ lost 1.34%

• Singapore's stock market retreated, tracking the losses in the US and European markets, led by a sell-off on tech stocks. The Straits Times Index (STI) ended 1.34% lower for the week to close at 3,447.56.

• Singapore’s central bank expects the island’s economy to expand near the upper end of a 1%-to-3% range forecast for this year, even as geopolitical tensions and higher global interest rates continue to pose challenges.

• Singapore’s key exports posted a deeper year-on-year decline of 8.7% in June, due mainly to fluctuations in the shipments of volatile products such as non-monetary gold and electronics.

Australian Market - $S&P/ASX 200(XJO.AU)$ gave up 8000-mark

• The Australian share market gave up the hard-won 8000-mark record on Friday. That reduced the weekly gain to 0.15%. However, the ASX 200 freshed a high of 8057.9 points on Wednesday.

The Week Ahead

Macro Factors - Inflation and GDP are around the corner

• This week, critical readings on economic growth and inflation, as well as the start of Big Tech earnings, will determine if the malaise continues.

• Thursday will bring the first reading of Gross Domestic Product (GDP) for the second quarter. Economists expect the US economy grew at an annualized pace of 1.9% in the second quarter, up from the 1.4% growth rate seen in the first quarter.

• Personal Consumption Expenditures index (PCE) for June, the Fed's preferred inflation gauge, will be released on Friday. The result is expected to show a 2.4% year-over-year increase, down from 2.6% in May.

• Investors will also be digesting the news that President Joe Biden will no longer be seeking reelection.

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Earnings

• Roughly a quarter of the companies in the S&P 500 are scheduled to release their second-quarter results this week, headlined by Alphabet (GOOGL, GOOG), Tesla (TSLA), and Chipotle (CMG).

• How Big Tech companies perform will likely determine the trajectory of earnings growth for the broader S&P 500. Four companies — Alphabet, Nvidia (NVDA), Meta (META), and Amazon (AMZN) — are expected to grow earnings by 56.4% compared to the same period a year prior, according to FactSet senior earnings analyst John Butters. The other 496 are expected to grow earnings by just 5.7%.

• When combining the two groups, the S&P is currently on pace to produce year-over-year earnings growth of 9.7%. This would mark the best quarter for earnings growth since the fourth quarter of 2021.

• Tesla Earnings Preview

• Alphabet Earnings Preview