D&D Note (7.21.2022) ~ Tech Stocks Continue Rally as Dollar Declines ~
The European Central Bank ECB gives markets a surprise with its first rate hike in 11 years coming in larger-than-expected with a 50 basis point hike.
The Dollar declined following the surprise action by the ECB and the 10 Year yield moved 12 basis points falling below 3% to 2.90%.
The weakening dollar allowed tech stocks to rally however the decline in dollar also saw oil fall back below $100 as oil is priced in dollars.
Jobless claims rise showing the job market is beginning to cool with claims totaling 251,000 up 7,000 from last week and above estimates of 240,000.
Consumers are paying an average of $10,000 more for used cars than if prices were ‘normal’ with average price of used car now $33,341.
Russia resumes gas flows via the Nord Stream 1 pipeline to Europe. There had been a fear Russia would completely shutdown the flow of gas after the pipeline was closed earlier this month for maintenance.
President Joe Biden tests positive for Covid-19 but experiencing only very mild symptoms and has begun taking the antiviral Paxlovid.
Polio case has been confirmed in New York State and believed to have originated outside the US. No cases of polio have originated in the US since 1979 after fully vaccinating the US population.
Stock Specific News:
Snap reported after the bell and missed on earnings estimates with the stock falling 26% in after-hours. Both Meta Platforms and Pintrest fell 5% in after-hours in sympathy with Snap’s decline.
Tesla jumps 8% today after reporting earnings last night that were better than feared. Elon Musk also said on earnings call they sold 75% of their Bitcoin holdings on balance sheet.
Rivian gained as Amazon has begun using their EV vans to deliver packages.
Amazon announces they are buying health-care provider One Medical for $3.9 billion.
AT&T fell after reporting earnings and saying its cash flow was hurt by customer late payments.
CSX Corp gained 4% after reporting better-than-expected earnings and upgraded to buy at Loop citing the companies pricing power.
Phillip Morris gained 4% after beating on quarterly earnings and increased its growth expectations going forward.
United Airlines fell 9.4% and American Airlines fell 7.6% after both companies reported disappointing earnings.
Cruise stocks as a basket were all down after Carnival sold an additional $1 billion in stock at a 10% discount.
Discover Financial fell 9% despite a beat on earnings with the company announcing they are suspending buybacks.
Ford tells investors they have secured 100% of the battery supplies needed to deliver the EV’s at a rate of 600,000 per year by end of 2023.
Closing Markets (as of 1:15pm PST)
DOW up 0.51%
S&P 500 up 0.99% (3,998.95)
NASDAQ up 1.36%
VIX down -3.69% to 23.00
2 Year Note down -13.17bp to 3.10%
10 Year Note down -12.88bp to 2.90%
Oil down -3.534% to $96.36 a barrel.
Gold up 1.012% to $1717.4 an ounce.
Bitcoin down -2.14% to $23,198.63
Ethereum up 1.35% to $1,577.34
~ Dave James / Principal Trader and Market Strategist