Equities report: Equities plummet

The bearish tendencies for US stock markets of the past week seem to have resumed as per the movement of the three major US stock market indexes which all moved sharply lower as the week came to a close. Today we are to discuss the implications of the US Employment data which was released on Friday, the guilty verdict given to Google on Monday, Intel’s CPU issues , Disney’s earnings and next week’s earnings releases and for a rounder view finish the report with a technical analysis of Nasdaq’s Daily chart.

US recession worries in focus

Following the US Employment data for July, widespread concerns about a potential recession in the US have risen. In particular, the unemployment rate was expected to remain steady at 4.1% and the average earnings growth rate to slow down to 3.7%, and the NFP figure to drop to 175k. Instead, the average earnings growth rate came in at 3.6%, the NFP figure dropped to 114k and the Unemployment rate ticked upwards to 4.3%, implying a loosening labour market in the US. As such, following the release of the US Employment data, widespread fears of a potential recession in the US led to a massive selloff across all asset classes, with investors opting to increase their cash holdings, possibly in order to re-enter the market once the dust settles. The sell-off led to a sharp decline in the US Equities markets, with all three major indexes moving sharply lower in addition to impacting Japan’s Topix index , which tumbled more than 12% in the biggest sell-off since the “Black Monday” crash of 1987. Nonetheless, should we see Fed policymakers adopting a more dovish tone in the coming week in order to ease market worries, it may further alleviate the market’s concerns, which in turn may encourage investors to re-enter the market and thus could possibly provide support for US Equities.

Google found guilty

Google (#GOOG) was found guilty on Monday of having an illegal monopoly over online search and related advertising. In particular, US District Judge Mehta stated that “After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly”. The ruling is being hailed as a landmark case, in which the government has asked for a “structural relief” which in theory could mean a break up of the company. Nonetheless, the ruling against Google (#GOOG) may weigh on the company’s stock price , yet that may be determined in a future hearing where the potential fines or remedies will be decided.

Intel’s CPU crashes are in the hot seat

Intel’s (#INTC) CPU’s are once again the hot-seat with Intel’s 13th and 14th generation CPU’s having problems for months, with constant crashes and blue screens of death according to some media publications. The company has stated that it would push out a microcode patch in the middle of August that may fix the issue. Moreover, the issue has led to Intel announcing that it would provide an additional two-year warranty extension- from the date of purchase and up to a maximum of 5 years on Intel Core 13th and 14th generation desktop processors. The issues faced by Intel could potentially impact the company’s revenue and sales and should the issue persist in their next-generation chips, it may weigh on the company’s stock price.

Disney earnings

Disney’s earnings were released earlier on today. The company beat earnings per share and revenue expectations. The better-than-expected earnings report for Q2 of 2024 may provide support for the company’s stock price. As such should the company continue to exceed the markets expectations in the following quarter it may further aid the company’s stock price.

Incoming earnings reports and Apple

As for incoming earnings reports we note Home Depot’s (#HD) earnings on Tuesday, UBS (#UBS) on Wednesday and Walmart (#WMT) and Cisco (#CSCO) on Thursday.

기술적 분석

US100 Cash Daily Chart

• Support: 17900 (S1), 17000 (S2), 16000 (S3)
• Resistance: 18830 (R1), 19500 (R2), 20200 (R3)

Nasdaq’s downwards motion appears to have continued with the index having temporarily dropped below $18,000. We maintain a bearish outlook for the index and supporting our case is the RSI indicator below our char which currently registers a figure below 40, implying a bearish market sentiment. For our bearish outlook to continue, we would require a clear break below the 17900 (S1) support level, with the next potential target for the bears being the 17000 (S2) support base. On the flip side, for a bullish outlook we would require a clear break above the 18830 (R1) resistance line with the next possible target for the bulls being the 19500 (R2) resistance ceiling. Lastly, for a sideways bias we would require the index to remain between the 17900 (S1) support level and the 18830 (R1) resistance line

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