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👋 Good morning! Markets surged back Monday after a rough week, with the S&P 500 and Nasdaq up 1.1% and 1.6%, respectively. There's a lot of big stuff happening Tuesday, but don't miss our third edition of the Yahoo Finance Chartbook. |
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| What we're watching | | ⚡️ Tesla reports: Tesla will report quarterly results after the close on Tuesday. As always, there will be plenty to parse, and between its delayed robotaxi presentation, its hot growth area in energy storage, a future AI focus, and improved delivery numbers, the fundamental story for Tesla has rarely been more dynamic. And then there's what its CEO Elon Musk brings to the table, including his decision to back Donald Trump, a onetime anti-EV candidate, in the 2024 presidential election.
🤖 Alphabet leads the hyperscalers: Elon and co. may take most of the oxygen out of the room, but Google's parent company is also set to release quarterly results Tuesday after the bell. The biggest question for the tech giant is exactly where its AI arrow is pointed. Investors still have big expectations for Big Tech to deliver on AI promises, and beefy earnings are holding up the S&P 500, with profits set to rise 56.4% for a group that includes Alphabet, Nvidia, Meta, and Amazon and 5.7% for the rest of the index.
🇺🇸 Catching up on Veep: Markets and investors are busy getting up to speed on the likely Democratic nominee for 2024, Vice President Kamala Harris, and trying to figure out how exactly she would govern. But one area the former prosecutor is up on is AI, after Harris took charge of the Biden administration's AI efforts and courted various tech firms to sign off on voluntary commitments around the nascent tech.
🌊 Trump trade confusion: Sunday's plot twist in the 2024 presidential race underlined just how tough it is to trade the market in July for an election in November, and on Monday some of the recent Trump trade dynamics unwound slightly. But even if Donald Trump wins the election, Wall Street has many different views on what a second term would mean — and how potential tariffs and tax cuts would actually affect markets.
📊 Earnings hit the gas: But wait, there's more! Capital One, Comcast, Lockheed Martin, General Motors, Spotify, UPS, Visa, and a few more companies will also report Tuesday, giving investors updates across a variety of sectors as a week that features results from over 130 companies in the S&P 500 ramps up. |
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| Investors seem to want uncertainty | | Today's Takeaway is by Myles Udland, Head of News.
The most enduring cliché in financial circles is that markets hate uncertainty. It's just not clear the opposite actually exists.
On Sunday, investors were served the latest dose of politically charged uncertainty when President Joe Biden announced plans to drop out of the presidential election as concerns grew over his age and ability to serve a second term.
Biden also announced his endorsement of Vice President Kamala Harris to take his place at the top of the Democratic ticket. But Biden's unprecedented departure from the race will set off a mad scramble for the incumbent party just over three months out from Election Day.
Stocks traded higher on Monday. Several strategists in our inbox on Monday suggested this announcement would lead to increased volatility in markets. But at least one strategist Yahoo Finance heard from suggested that this, perhaps, was the outcome many investors had been seeking for some time.
In a note to clients on Monday, RBC's head of US equity strategy Lori Calvasina wrote, "As we reflect on Sunday's announcement, the main thing we've been remembering is how so many of the US-based investors we've spoken with this year seemed to want different candidates."
In other words, Sunday's announcement — however surprising and discombobulating given the timing, the rollout, and so on — is what many investors had not only expected but wanted.
Which obviates that all investors really have to work with is uncertainty. Stocks don't trade in response to realized corporate results but on anticipated outcomes. Positive or negative stock reactions to an earnings report are about the future, not the past. Even when a company doesn't offer formal guidance.
Elsewhere in her note, Calvasina wrote that the discomfort felt while discussing the election with US clients has been similar to what "one might feel by staring at the sun for too long."
Uncertainty, then, was not a fear but a desire for these folks.
And the opposite proved more painful anyway. |
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| Chart of the day | | Tuesday marks the release of the third volume in Yahoo Finance's Chartbook series, and our Markets Reporter Josh Schafer and Senior Editor and dataviz whiz Brent Sanchez have produced something special.
Through 32 grade A charts provided by a who's who of Wall Street strategists, analysts, economists, and more, Josh and Brent illustrate the story of the markets and economy at this point midway through 2024.
It's hard to pick a favorite, but I found this chart from Goldman Sachs' chief US equity strategist David Kostin to be particularly insightful — illustrative of a critical narrative for the AI conversation. |
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 | | Here's Kostin in his own words:
"This chart shows how the market has been trading three groups of potential AI beneficiaries.
The first group is stocks with revenues tied to investment in AI infrastructure, including semiconductor firms, cloud providers, and data centers, among others.
The second is companies with the potential to monetize AI by generating incremental revenues.
The third group contains the companies with the biggest potential earnings boost from AI-driven productivity gains. So far, investors have expressed confidence in the trajectory of AI investment, with those beneficiaries outperforming the average S&P 500 stock by nearly 30 percentage points so far this year.
However, the flat performance of the other groups signals that investors remain skeptical about the longer-term impacts of AI adoption." |
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| Earnings and economic calendar | | Tuesday
- Economic data: Richmond Fed Manufacturing Index, July (-7 expected, -10 prior); Existing home sales month-over-month, June (-2.7% expected, -0.7% previously)
- Earnings: Alphabet (GOOG, GOOGL), Cal-Maine Foods (CALM), Capital One (COF), Comcast (CMCSA), Enphase (ENPH), Freeport-McMoRan (FCX), GE Aerospace (GE), General Motors (GM), Lockheed Martin (LMT), Phillip Morris International (PM), Spotify (SPOT), Tesla (TSLA), UPS (UPS), Texas Instruments (TXN), Visa (V)
Wednesday
- Economic data: MBA Mortgage Applications, week ending July 19 (+3.9% prior); S&P Global US manufacturing PMI, July, preliminary (51.4 expected, 51.6 previously); S&P Global US services PMI, July, preliminary (55 expected, 55.3 previously); S&P Global US composite PMI, July, preliminary (54.8 previously); New home sales, month-over-month, June (+3.8% expected, -11.3% previously)
- Earnings: AT&T (T), Chipotle (CMG), Ford (F), IBM (IBM), General Dynamics (GD), Lamb Weston (LW), Las Vegas Sands (LVS), ServiceNow (NOW), Viking Therapeutics (VKTX), Waste Management (WM), Whirlpool (WHR)
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