Wall Street closes mixed as investors pay attention to tech earnings
Wall Street closed Monday with a?mixed bag, as investors awaited guidance for major technology companies during a busy quarter of quarterly earnings, and also worried that persistently high oil prices might force the Federal Reserve to raise interest rates.
Microsoft, Amazon Meta, and Apple will report their quarterly results in the coming week. Investors questioned whether the multi-year rally fuelled by optimism over artificial intelligence was losing steam.
Last week, investors were shocked by the quarterly results of Alphabet and Tesla that showed heavy expenditures on artificial intelligence.
On Monday, crude oil fell to its lowest level in a week as U.S. president Donald Trump announced that Washington had "good talks" and a good chance of a deal with Iran. However, he warned that if negotiations did not produce results, U.S. attacks would resume. Brent futures surpassed $100 per barrel after new attacks on Middle East shipping.
Both the S&P 500 Consumer Staples Index and?the Health Care index gained.
The PHLX Chip Index continued its recent decline. It is down about 20% from the record close of June 22, and still up by?about 63% until 2026.
The stellar debut of Chinese chipmaker CXMT Corp on Monday, and the report that China has begun?manufacturing its own DUV chipmaking tool also signals a?intensifying competitiveness for the U.S. Semiconductor industry.
Bill Merz is the head of capital market research and portfolio development at U.S. Bank Asset Management Group. He said that today's market represents a continuation in rotation. "Part of the reaction in the market may be due to the creeping suspicion about a possible rate hike."
The preliminary data shows that the S&P 500 rose 1.45 points or 0.02% to 7,413.43 while the Nasdaq Composite fell 41.21 or 0.16% to 24,934.61. The Dow Jones Industrial Average gained 255.58, or 0.49% to 52,202.83.
Brent crude prices fell 8% on Saturday to $89 per barrel, after Washington suspended its two-week air campaign against Iran. This was Trump's latest strategic U turn in the five-month conflict.
Exxon Mobil and Occidental Petroleum, two oil companies, both fell.
According to the CME FedWatch tool, traders project that 62% of central banks will keep rates unchanged and 38% are likely to increase them by 25 basis points.
Personal Consumption Expenditures Prices for June are due a day following the central bank's announcement. This index will play a key role in determining market expectations of interest rates for later this year.
According to LSEG I/B/E/S, analysts expect the S&P 500's second-quarter earnings will increase by?39% compared to last year, with AI stocks accounting for most of this growth.
According to LSEG, the S&P 500 trades at about 20 times expected earnings compared to a 10 year average of 20.
(source: Reuters)
