Tracking Market Trends

TradingKey - On July 14, Eastern Time, the three major U.S. stock indices closed slightly higher. U.S. June CPI came in below market expectations, easing investor concerns over short-term interest rate hikes by the Federal Reserve; meanwhile, strong second-quarter earnings from major banks helped restore market risk appetite. Despite the continued escalation of the U.S.-Iran conflict around the Strait of Hormuz pushing up oil prices, gains in tech and financial stocks helped U.S. equities shake off pressure from energy risks.

At the close, the Dow Jones Industrial Average rose 0.02% to 52,513.24; the S&P 500 Index rose 0.38% to 7,543.89; the Nasdaq Composite Index rose 0.90% to 26,107.01.

In terms of sectors, technology stocks were the primary supporting force, with semiconductor and AI-related stocks rebounding significantly. Nvidia ( NVDA) rose 4.06%, Micron Technology ( MU) rose 4.92%, AMD ( AMD) rose 2.57%, Broadcom ( AVGO) rose 1.32%. Financial stocks also delivered strong performances. Goldman Sachs ( GS) surged 9%, primarily boosted by better-than-expected second-quarter profits; JPMorgan Chase ( JPM) rose 2.5%, Bank of America ( BAC) rose 1.88%. Earnings from major banks showed that trading businesses and corporate M&A activity improved, providing a positive signal for the start of the earnings season. However, financials diverged, as Citigroup ( C) fell 5.29%, Wells Fargo ( WFC) fell 2.71%, with the market remaining cautious about expense pressures and future guidance.

In commodities, crude oil continued to rise. WTI ( USOIL) crude closed up 2.35% at $79.82; Brent ( UKOIL) crude closed up 2.21% at $85.15. Gold ( XAUUSD) rebounded sharply, with spot gold rising 1.3% to $4,053. Gold was previously under pressure due to rising oil prices and Fed rate hike concerns, but after the cooling CPI data, the market scaled back short-term rate hike bets, driving gold to rebound from a two-week low.

Market News

US June CPI was lower than expected, easing concerns over Federal Reserve rate hikes. Data from the US Labor Department showed that the Consumer Price Index (CPI) rose 3.5% year-on-year in June, down from 4.2% in May, and fell 0.4% month-on-month. Cooling inflation prompted the market to sharply scale back expectations for a Fed rate hike at its July meeting. Traders now estimate that the probability of the Fed keeping interest rates unchanged at its July meeting has risen to 83.4%. For the market, this data temporarily eased inflation concerns brought by rising oil prices and served as a key catalyst driving a rebound in tech stocks and gold.

The earnings season for major banks got off to a strong start. JPMorgan Chase reported record quarterly profits, while profits at major banks such as Goldman Sachs, Bank of America, and Citigroup also beat market expectations. Among them, Goldman Sachs' stock surged over 9%, boosted by a rebound in M&A activity and trading revenue growth. The improved bank earnings demonstrate that Wall Street's trading and investment banking businesses remain resilient amid high interest rates and market volatility. However, share price declines for Citigroup and Wells Fargo also show that investors remain focused on expense control, credit risk, and future earnings guidance.

Federal Reserve Chairman Warsh testifies before Congress. In his first semi-annual monetary policy hearing, Warsh reiterated that the Fed remains committed to bringing inflation down to its 2% target, while also emphasizing the importance of the employment mandate. With oil prices rising recently due to the situation in the Middle East, the market is watching whether the Fed will rebalance its policy trade-offs between inflation and growth. Although the June CPI eased short-term rate hike pressure, if oil prices remain high, subsequent inflation data could still reshape rate expectations.

IBM ( IBM) earnings warning hits traditional tech stocks. IBM warned that second-quarter revenue would fall short of market expectations, stating that enterprise tech spending is shifting from traditional software to data center infrastructure. The news sent IBM's stock plunging by more than 25%, serving as a major drag on the Dow that day. Market observers interpreted this to mean that investments in AI infrastructure are altering corporate technology budget allocations; traditional software and IT services companies may face a reassessment of their growth models, while companies related to AI chips, data centers, and cloud infrastructure continue to attract investor interest.

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