Recent market activity shows US stocks ending mostly higher, with the Dow Jones Industrial Average rising $262.83, or 0.51%, and the S&P 500 up $15.60, or 0.2%, to $7,428.78. However, the Nasdaq composite fell $55.17, or 0.2%, to $24,876.91. This comes as crude oil prices declined significantly after the US and Iran paused attacks, raising hopes for a diplomatic resolution and reducing concerns about energy supply disruptions. Brent crude futures fell around 11% to approximately $87.60 per barrel, while US benchmark West Texas Intermediate settled 9.8% lower at $81.65 per barrel. Traders have trimmed their bets on a Federal Reserve interest rate hike, with a 31.5% probability now eyed, down from over 36% a day prior, according to CME Group data.
The market's focus has shifted to a series of quarterly earnings reports from major US technology companies, including Amazon, Apple, Meta Platforms, and Microsoft. These reports are expected to provide further insights into artificial intelligence (AI)-related spending, especially after Alphabet's recent earnings raised concerns about the scale and profitability of AI infrastructure investments. Concerns about intensifying competition in the semiconductor industry and whether AI investments will yield expected profits have pressured technology shares. For instance, Micron dropped 8.9%, Advanced Micro Devices was down 8.1%, and Applied Materials fell 7.8%.
Despite the tech sector's pressures, other companies reported stronger-than-expected earnings for the spring quarter, bolstering confidence. Coca-Cola climbed 5% after its revenue rose 7%, while Sherwin-Williams rallied 8.3% and Illinois Tool Works rose 3.6% following their positive earnings reports. On the macroeconomic front, durable goods orders in the US rose less than expected in June, up 0.3% month-on-month, or $1.1 billion, to $334.8 billion. Consumer confidence also showed a weaker-than-expected reading.
Meanwhile, in Canada, the Bank of Canada's interest rate expectations have remained stable, defying global trends. National Bank of Canada strategists note that domestic economic factors are currently taking precedence over energy prices in influencing BoC policy. A proposed $35 billion to $44 billion pipeline project could potentially double crude shipments to overseas markets, adding roughly 1 million barrels per day of capacity, pending national priority status approval as early as October.
Investors are also eagerly awaiting the US Federal Reserve’s interest rate decision on Wednesday. The decline in oil prices helped ease Treasury yields, with the yield on the 10-year Treasury falling to 4.60% from 4.65%. The broader market is still near its all-time high, with hopes for continued strong corporate profits. The Hindu BusinessLine reported India's Sensex Nifty50 at 24,380.
