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Stocks See Downward Pressure from Weakness in Technology Stocks

Barchart - Fri Jul 22, 9:54AM CDT
Stocks-Money-Rates - Wall St-American Flags

What you need to know…

The S&P 500 Index ($SPX) (SPY) today is down -0.07%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.15%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.41%. 

U.S. stock indexes this morning are mixed, with the Dow Jones Industrials at a 6-week high. Better-than-expected quarterly earnings results from HCA Healthcare and Tenet Healthcare are leading healthcare stocks higher today.  Also, American Express is up more than +3% today after reporting record revenue for Q2 and raising its full-year revenue forecast. In addition, a slide in T-note yields today supports stocks after the 10-year T-note yield dropped to an 8-week low of 2.729%. 

However, social media stocks are under pressure today as Snap plunged -35% after reporting disappointing earnings results.  Also, technology stocks are under pressure, with Seagate Technology Holdings Plc, the world’s biggest maker of computer hard drivers, down more than -5% after giving a weak forecast for the current pricing period citing “weakening global economic conditions.”

Today’s U.S. economic data was slightly supportive for stocks after the July U.S. S&P Global manufacturing PMI fell -0.4 to a 2-year low of 52.3.  However, that was stronger than expectations of 52.0.

Today’s stock movers…

Healthcare stocks are rallying today and supporting gains in the overall market.   HCA Healthcare (HCA) is up more than +15% today to lead gainers in the S&P 500 after reporting Q2 adjusted Ebitda of $3.04 billion, stronger than the consensus of $2.81 billion.  Also, Tenet Healthcare (THC) is up more than +10% after reporting Q2 adjusted Ebitda of $843 million, well above the consensus of $729 million, and sees full-year adjusted Ebitda of $3.38-$3.58 million, stronger than the consensus of $3.38 billion.  In addition, Universal Health Services (UHS) is up more than +3%, and Cardinal Health (CAH) is up more than +1%

American Express (AXP) is up more than +3% today to lead gainers in the Dow Jones Industrials after reporting Q2 revenue of $13.40 billion, well above the consensus of $12.51 billion and raised its full-year revenue forecast to up +23%-25% from a prior view of +18%-20%.

Schlumberger (SLB) is up more than +6% today after reporting Q2 revenue of $6.77 billion, above the consensus of $6.28 billion, and forecast full-year revenue of at least $27 billion, better than the consensus of $26.21 billion.

PPG Industries (PPG) is up more than +4% today after reporting Q2 adjusted EPS of $1,81, above the consensus of $1.75.

SVB Financial Group (SIVB) is down more than -15% today to lead losers in the S&P 500 after reporting Q2 EPS of $5.60, well below the consensus of $7.72, and forecast full-year net interest margin of 2.15% to 2.25%, below the consensus of 2.34%.

Verizon Communications (VZ) is down more than -6% today to lead losers in the Dow Jones Industrials after reporting Q2 adjusted EPS of $1.31, below the consensus of $1.33, and lowering its full-year adjusted EPS estimate to $5.10-$5.25 from a prior estimate of $5.40-$5.55. 

Social-media stocks are falling today, with Snap (SNAP) plunging -35% after reporting Q2 revenue of $1.11 billion, slightly weaker than the consensus of $1.14 billion. Also, Meta Platforms (META) is down more than -5% to lead losers in the Nasdaq 100.  Pinterest (PINS) is down more than -10%, and Alphabet (GOOGL) is down more than -3%. 

Seagate Technology Holdings Plc (STX) is down more than -5% after reporting Q4 revenue of $2.63 billion, below the consensus of $2.80 billion, and forecast Q1 revenue o $2.50 billion, weaker than the consensus of $3.01 billion. 

Capital One Financial (COF) is down more than -5% today after reporting Q2 adjusted EPS of $4.96, weaker than the consensus of $5.10. 

Across the markets…

Sep 10-year T-notes (ZNU22) this morning are up +28 ticks, and the 10-year T-note yield is down -8.8 bp at 2.787%.  Sep T-notes this morning rallied to a 2-week high, and the 10-year T-note yield fell to an 8-week low of 2.729%.  A rally in European government bonds is providing carry-over support to T-notes as the 10-year German bund yield dropped to a 7-week low of 1.018% and the 10-year UK Gilt yield fell to an 8-week low of 1.921%.   

The dollar index (DXY00) this morning is down by -0.10%.  A fall in T-note yields today is weighing on the dollar after the 10-year T-note yield dropped to a 2-week low.  Also, strength in the yen today is undercutting the dollar after USD/JPY fell to a 1-1/2 week low. 

EUR/USD (^EURUSD) is down by -0.34% today.  Signs of a slowdown in economic activity in the Eurozone are weighing on EUR/USD today after the Eurozone July S&P Global manufacturing PMI fell to a 2-year low.  Also, the Bundesbank today warned that worries about Russian gas "are weighing on the outlook" for German growth.

The Eurozone July S&P Global manufacturing PMI fell -2.5 to 49.6, weaker than expectations of 51.0 and the steepest pace of contraction in 2 years.  Also, the Eurozone July S&P Global composite PMI fell -2.6 to 49.4, weaker than expectations of 51.0 and the steepest pace of contraction in 17 months.

In its monthly report today, the Bundesbank said "the inflation rate is likely to remain high in the coming months," and the worry about Russian gas "is weighing on the outlook" for German growth.

USD/JPY (^USDJPY) today is down -0.76%.  The yen rallied to a 1-1/2 week high today on a decline in T-note yields after the 10-year T-note yield fell to a 2-week low.  Also, today’s data that showed a bigger than expected increase in Japanese consumer prices is hawkish for BOJ policy and sparked short-covering in the yen.

Japan June national CPI ex-fresh food & energy rose +1.0% y/y, stronger than expectations of +0.9% y/y and the biggest increase in 6-1/2 years.

The Japan July Jibun Bank manufacturing PMI fell -0.5 to a 10-month low of  52.2.

August gold (GCQ22) this morning is up +21.8 (+1.27%), and September silver (SIU22) is up +0.121 (+0.67%.)  Precious metals this morning are moderately higher, with gold climbing to a 1-week high. A weaker dollar today is supporting gains in metals prices.  Gold is also climbing today on a decline in global bond yields.

In addition, gold is finding support on increased demand as an inflation hedge after the Bundesbank today said "the inflation rate is likely to remain high in the coming months."  Also, the Japan Jun national CPI ex-fresh food & energy rose +1.0% y/y, stronger than expectations of +0.9% y/y and the biggest increase in 6-1/2 years.  Ongoing fund liquidation of long gold positions continues to bearish for gold prices as long gold positions in ETFs have dropped for 17 consecutive days to a 4-1/2 month low Thursday. 



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