This Week Could Reset the Market Narrati
The dominant theme in global equity markets this past week was the intersection of earnings season, monetary policy and the ongoing repricing of the semiconductor sector. With more than one-third of the S&P 500 reporting quarterly results, for the most part corporate America continued delivering resilient earnings growth despite a backdrop of higher interest rates and persistent inflation.
No Summer Doldrums
The dominant theme in U.S. equity markets last week was the sharp repricing of hyperscalers, prompted by investors showing little tolerance for rising capital expenditures tied to AI infrastructure.
Entering the heart of second-quarter earnings season
A sharp selloff in global memory chip stocks accelerated through the week, sparking concerns over the sustainability of the artificial intelligence investment cycle, while renewed hostilities in the Middle East and shifting Federal Reserve expectations drove broad sector rotation across global equity markets.
Major bank earnings kick off
Concerns over the durability of the artificial intelligence rally and renewed geopolitical tensions in the Middle East dominated global equity markets this week. Selloffs in memory chip companies early in the week were tied to Samsung’s preliminary earnings report, in spite of the fact that the company forecasted a nearly 20-fold year-over-year increase in profits.
FOMC meeting minutes release
A lackluster showing for the labor market took center stage last week—June’s 57k new jobs number was nearly 50% below expectations, while the previous two months’ figures were revised down by a combined 74k.
NFP Jobs data and a holiday shortened week ahead
Last week’s overarching story in equity markets was the artificial intelligence trade—after an extraordinary run, investors decided it had become overextended. Heavy declines in Samsung Electronics and SK Hynix fueled an over 10% decline in South Korea’s KOSPI index on Tuesday, a market that is still up 125% YTD.
Wall Street watching a key inflation update
As the week began, investors extended the previous week’s relief rally, fueled by news of a deal to end the U.S. Iranian conflict and the potential that the Strait of Hormuz may reopen soon. Lower energy prices supported the Industrials and Materials sectors, and Technology benefited from the overall improvement in risk sentiment.
New Fed chief in charge
The week before last ended with a sharp selloff in the wake of a stronger-than-expected U.S. employment report, leading the dollar and Treasury yields to surge.
U.S. equity market resilience to be tested
U.S. equities began the week with a continuation of the relentless semiconductor led rally that propelled all the major averages into new highs until a dramatic mid-week sector rotation occurred.
Non-farm payrolls report is the week’s marquee event
U.S. equities extended their rally for a ninth consecutive week, with the S&P 500 climbing as easing oil prices, resilient earnings, and AI-linked momentum overcame inflation concerns. Alongside the S&P, the Nasdaq-100, Nasdaq Composite, and DJIA all closed at record highs on Friday, with only the Russell 2000 pulling back a touch from Thursday’s record close.
