To The Moon

US Stock Market

The $S&P 500(.SPX)$ rose 0.3% this morning to close at 6264 after reaching an all-time high of 6302 earlier in yesterday’s session.  Trump’s purported murmurings about Fed Chair Powell’s future halfway through today’s session sent the market lower while bank earnings and inflation woes weighed on the benchmark index yesterday.  But the market rallied into the close today as Trump denied the Powell sacking rumour.  The independence of the Federal Reserve is a key component of the US market and any speculation of Trump changing this sends shivers down the spin of market participants.

The big news for the week was the $NVIDIA(NVDA)$ CEO Jensen Huang stating that it hoped to resume shipments of its H20 chips to China “soon”.  The Nasdaq closed 0.4% higher for its fifth record close in the last six days

Treasury yields rose with 20- and 30-year bonds back above 5% as inflation data was released when the market opened with tariffs blamed for the rise in inflation to its highest level in 4 months.  The probability of a July rate cut by the Fed has fallen to 2% from 23% a month ago as Fed governors continue their “we are in no rush and cautious rhetoric”.  The market is still pricing in rate cuts in September and December this year.

US reporting season

The reporting season in the US kicked off yesterday morning with $BlackRock(BLK)$ , $Citigroup(C)$ , $JPMorgan Chase(JPM)$ and $Wells Fargo(WFC)$ reporting before the open with a mixed bag of results.  $BlackRock(BLK)$ fell 5.9% after its earnings miss and reported lower long term net inflows to its funds but gained 3.5% today. $Wells Fargo(WFC)$ fell 5.5% after it lowered its full-year guidance for net interest income after another quarter of slow growth amid the ongoing trade war.  JPMorgan Chase dropped 0.8% yesterday and 0.3% today even after it raised its net interest income forecast for 2025 after a strong performance in its investment banking and trading divisions helped it surpass profit expectations for the second quarter.

Citigroup's profit beat Wall Street estimates and jumped 3.6%, as its traders brought in a windfall from turbulent markets and investment bankers gained from resilient dealmaking in the second quarter including being involved in 7 of the top 10 M&A deals for the quarter.  It gave back some of the gain today.

Reporting today was $Johnson & Johnson(JNJ)$ that jumped 6.2% after its stellar result and positive forward guidance.  Goldman Sachs gained 0.9% after announcing a 22% earnings gain while $Bank of America(BAC)$ and $Morgan Stanley(MS)$ fell 0.3% and 1.3%, respectively joining yesterday’s bank results that showed higher profits by trading desks in light of the Q2 volatility but the stock price fell anyway.  United Airlines reported after the bell and was 1.7% lower after forward guidance was lower than anticipated. $Netflix(NFLX)$ and $Pepsi(PEP)$ report on Friday with $American Express(AXP)$ and $3M(MMM)$ on Saturday.

Wall Street is hoping that the second-quarter earnings season will boost a stock market that’s already near all-time highs. Expectations are low ahead of the reports, however. The $S&P 500(.SPX)$ is projected to post a blended earnings growth rate of 4.3% on a year-over-year basis, according to FactSet data. That would be mark the lowest growth rate for the index going back to the fourth quarter of 2023.

In another index rebalance cloud-based ad-buying platform $Trade Desk Inc.(TTD)$ will join the S&P 500 later this week after Ansys drops out after being taken over by Synopsys for about $35B.

Tariff flip-flop continues

The Tariff flip-flop continues with Forbes reporting that there have 28 changes in the tariffs since Liberation Day while a Yale University study states that the average effective tariff is 16.6% up from 2.5% at inauguration. What we can say is that Trump has moved to broaden tariffs dramatically: a 10% universal tariff, 50% on steel and aluminium, and 25% on cars and parts.

Year to Date

The $S&P 500(.SPX)$ Index’s top performer year to date remains Palantir, up 99.5%, with Super Micro up more than 74% and GE Vernova and Seagate Technology up 70%. Palantir builds and deploys software platforms for the intelligence community to assist in counterterrorism investigations and operations. It was the top performer in the index last year and is currently trading at approximately US$151 per share, having started 2024 at less than US$17.

The worst performers are Deckers Outdoor down 52%, Centene down 50% and Dow component UnitedHealth Care down 42%. The best performers in the Dow are Boeing, IBM and NVIDIA

Sectors

Of the 11 sectors that make up the S&P 500 year to date Basic Materials and Industrials are up more that 13% with Financial Services and Communication Services up 10%.  The laggards continue to be Healthcare down 2.2% and Consumer Cyclicals down 0.6% YTD.