Daily global market review

Today's market performance was mixed, driven largely by the price movement of mega-cap stocks, which influenced the overall index levels. Initially, the major indices experienced losses, but they managed to turn positive during mid-day trading. The day was filled with significant news, with investors digesting a plethora of earnings reports since the previous day's close, an increase in selling interest in longer-dated Treasuries, a 25-basis points rate hike by the Bank of England to 5.25%, and discussions about yesterday's U.S. credit rating downgrade by Fitch Ratings. The Treasuries faced further losses following the release of a better-than-expected report on productivity and unit labor costs. Although weekly initial jobless claims saw a slight increase, they still indicated a strong labor market. However, the ISM Non-Manufacturing Index revealed a deceleration in the services sector growth for July. As a result, the 10-year note yield rose 11 basis points to 4.19%, remaining 14 basis points below its October high. Meanwhile, the 30-year note yield increased by 14 basis points to 4.30%.

Despite some ongoing calls for a market pullback, the major indices managed to close with minimal losses, displaying a level of resilience. Market breadth remained negative but modest, with decliners leading advancers at the NYSE and Nasdaq. Among the notable earnings reports, Qualcomm experienced a significant drop (-8.2%) due to a lukewarm outlook in connection with its fiscal Q3 report. The energy sector showed the most substantial gain in the S&P 500 (+1.0%), while the utilities sector (-2.3%) performed the worst.

Looking ahead, investors are keeping an eye on earnings reports from Apple (AAPL) and Amazon.com (AMZN) after the market close, as well as the July Employment Situation Report scheduled for release tomorrow at 8:30 a.m. ET.

For the year-to-date performance, the Nasdaq Composite stands out with a 33.4% gain, followed by the S&P 500 with +17.3%, Russell 2000 with +11.4%, S&P Midcap 400 with +10.4%, and Dow Jones Industrial Average with +6.2%.

Reviewing today's economic data, the Q2 productivity increased by 3.7%, surpassing the consensus of 1.7%, while unit labor costs decelerated to 1.6%, below the consensus of 2.7%. Weekly initial claims reached 227K, slightly above the consensus of 225K, and the ISM Non-Manufacturing Index for July came in at 52.7%, falling short of the consensus of 53.0%. The majority of respondents in the services sector remained cautiously optimistic about business conditions and the economy.

The 10-year Treasury note declined by 30/32, resulting in a yield of 4.19%. At the NYSE, there were 1,078 advancing stocks and 1,792 declining stocks, with a total volume of 888 million shares. Meanwhile, the Nasdaq saw 1,947 advancing stocks and 2,462 declining stocks, with a trading volume of 6.0 billion shares.

In terms of industry performance, the energy, consumer discretionary, financials, and communication services sectors showed strength, while the real estate, utilities, materials, financials, and industrials sectors performed weakly.

Several factors influenced the market today. Investors were busy digesting a substantial amount of earnings news, leading to mixed performance in various indices. Additionally, there was a prevailing sense that the market might be due for a pullback. Climbing Treasury yields exerted pressure on the stock market, with the 10-year note yield settling just 14 basis points below its October high. Mega-cap stocks experienced choppy action, further contributing to the mixed performance of the indices. Moreover, discussions about yesterday's downgrade of the U.S. credit rating by Fitch Ratings continued to be a topic of concern in the market.

In the United States, the Dow decreased by 66.63 points, representing a 0.19% change. The S&P 500 also saw a decline of 11.50 points, or 0.25%. The NASDAQ dropped 13.73 points, equivalent to a 0.10% decrease. On the other hand, the VIX, a measure of market volatility, fell by 0.17 points, signifying a 1.06% drop. The Russell 2000 experienced a slight decrease of 5.43 points, or 0.28%.

In Canada, the S&P/TSX Composite index decreased by 97.47 points, equivalent to a 0.48% decline. The S&P/TSX 60 also saw a decrease of 7.64 points, indicating a 0.63% change. In Brazil, the BOVESPA index decreased by 272.95 points, or 0.23%. The S&P IPSA in Chile decreased by 59.22 points, a 0.94% change. Meanwhile, the S&P/BMV IPC in Mexico increased by 168.96 points, or 0.32%.

In Europe, the STOXX Europe 50 index saw a decrease of 30.43 points, representing a 0.77% decline. The STOXX Europe 600 also experienced a decrease of 2.91 points, indicating a 0.63% change. The FTSE 100 in the United Kingdom decreased by 32.47 points, a 0.43% change, while the FTSE MIB in Italy saw a decline of 271.80 points, equivalent to a 0.94% decrease. The CAC 40 in France also experienced a decrease of 52.31 points, signifying a 0.72% change.

In Asia, the Nikkei 225 in Japan saw a significant decrease of 548.41 points, or 1.68%. The Hang Seng in Hong Kong decreased by 96.51 points, a 0.49% change. On the other hand, the Shanghai Composite in China increased by 18.77 points, representing a 0.58% rise. In Australia, the S&P/ASX 200 index decreased by 42.90 points, or 0.58%, while the KOSPI in South Korea saw a decrease of 11.08 points, signifying a 0.42% change. The Taiwan SE in Taiwan experienced a significant decline of 319.14 points, representing a 1.85% drop.

The data above provides information on various stock market indices from India. Among these indices, the NIFTY Midcap 100 index experienced the highest gain among the listed indices, with a positive change of 0.25% while the NIFTY Smallcap 100 showed a gain with a positive change of 0.12%, corresponding to an increase of 13.80 points. On the other hand, the Nifty 50 USD experienced the largest decline, registering a negative change of 0.92% and a decrease of 75.66 points. Notably, the BSE Sensex also faced a significant drop, showing a negative change of 0.82% and a decrease of 542.10 points. Meanwhile, the Nifty 50, which is a prominent index in India, had a negative change of 0.74% and saw a decline of 144.90 points.

• Nikola Corporation (NKLA) stock price increased by $0.38, representing a 12.42% rise to $3.40, with a trading volume of 160 million shares.
• Yellow Corporation (YELL) saw its stock price rise by $0.33, a 10.09% increase, reaching $3.60, and trading with a volume of 99 million shares.
• Tesla, Inc. (TSLA) experienced a $5.21 rise in its stock price, a 2.05% increase, reaching $259.32, with a trading volume of 97 million shares.
• Advanced Micro Devices, Inc. (AMD) stock price increased by $3.80, reflecting a 3.48% rise to $113.15, with a trading volume of 90 million shares.
• NIO Inc. Sponsored ADR Class A (NIO) saw its stock price increase by $0.89, a 6.11% rise to $15.46, with a trading volume of 85 million shares.
• Amazon.com, Inc. (AMZN) experienced a $0.70 increase in its stock price, a 0.55% rise to $128.91, with a trading volume of 78 million shares.
• Tupperware Brands Corporation (TUP) stock price declined by $0.15, representing a 4.09% decrease to $3.52, with a trading volume of 70 million shares.
• Palantir Technologies Inc. Class A (PLTR) saw its stock price decrease by $0.26, a 1.37% drop to $18.71, with a trading volume of 54 million shares.
• Apple Inc. (AAPL) experienced a $1.41 decrease in its stock price, a 0.73% drop to $191.17, with a trading volume of 52 million shares.
• Ford Motor Company (F) stock price increased by $0.06, representing a 0.46% rise to $13.10, with a trading volume of 52 million shares.

In the world of cryptocurrencies, the Nasdaq Crypto Index increased by 3.83 points, signifying a 0.23% change. Bitcoin saw a slight increase of 113.00 points, equivalent to a 0.39% rise, while Ether increased by 9.50 points, a 0.52% change. However, Litecoin experienced a decrease of 1.30 points, representing a 1.49% decline, and XRP decreased by 0.01 points, indicating a 1.60% change.

In the bonds and rates market, the yields for various treasury durations experienced both upward and downward movements. The 3 Month Treasury yield declined slightly to 5.268%, showing a yield change of -0.002. Meanwhile, the 2 Year Treasury yield remained nearly unchanged at 4.891%, with a minimal yield change of +0.000. On the other hand, the 5 Year Treasury yield rose to 4.292%, reflecting a yield change of +0.046. The 10 Year Treasury yield also saw an increase, reaching 4.179% with a yield change of +0.105. Similarly, the 30 Year Treasury yield moved upwards to 4.296%, showing a yield change of +0.135.

In the currency market, the Euro/US Dollar pair experienced a slight increase, reaching a rate of 1.0950. The change was minimal, with no difference in points, but the percentage change was 0.08%. A similar scenario was observed for the British Pound/US Dollar pair, which rose to 1.2711, showing a minute increase of 0.02%. The US Dollar/Canadian Dollar pair remained relatively stable, with a rate of 1.3353, representing a negligible change of 0.01%. On the other hand, the US Dollar/Swiss Franc pair saw a slight decline, dropping to 0.8742, which equates to a percentage decrease of 0.35%. Lastly, the US Dollar/Japanese Yen pair also experienced a decrease, settling at 142.4925, with a change of -0.82 points and a percentage change of 0.57%.

On August 4, 2023, there will be significant events and economic indicators scheduled for release.

At 8:30 AM ET, the Employment Situation report will be published, covering metrics such as Manufacturing Payrolls, Private Payrolls, Unemployment Rate, Participation Rate, Nonfarm Payrolls, Average Hourly Earnings (both month-to-month and year-to-year), and Average Workweek. These indicators are expected to have a high impact on the market. Later, at 1:00 PM ET, the Baker Hughes Rig Count will be released for Canada, North America, the U.S., and the Gulf of Mexico. This report will provide insights into the number of active drilling rigs, potentially affecting the energy sector.

• Stocks and Yields: It appears to be a risk-off day in the stock market, with stocks falling for a second consecutive day. The downgrade in the U.S. government's credit rating is likely contributing to the cautious sentiment among investors. As a result, sectors like real estate and utilities are underperforming, down more than 1.5% each. The rising yields on the 10-year Treasury bond, currently trading around 4.16%, indicate a move towards safer assets as investors seek flight to safety. This suggests that concerns about the economic outlook are leading to a shift away from riskier investments.
• Earnings Season: The earnings season is ongoing, and investors are closely watching companies like Apple and Amazon for their forward guidance. Apple's guidance will be particularly important as it may provide insights into the pace of consumer spending. While there have been some standout companies beating analyst estimates, the overall earnings season has been mixed. Recent data indicates that consumer spending is still driving growth in the economy, and household balance sheets remain strong with workers seeing income gains. However, a balanced outlook is expected as Federal Reserve rate hikes are anticipated to have an impact on demand, inflation, and economic growth in the coming months.
• Chinese Economic Growth: Chinese economic growth has disappointed many as it has not seen a post-pandemic boom similar to that observed in developed economies. The country is facing the risk of deflation, which can lead to high unemployment and slow economic growth. To address these issues, Chinese officials have announced plans to stabilize the consumer housing market and reduce speculative activities. The Chinese property market, burdened by high debt and low occupancy in certain regions, is also facing concerns about potential bankruptcies. Investors are cautious about Chinese equity markets due to these challenges, and they will closely monitor any stimulative policies implemented by Chinese authorities to support economic growth.