Market News 7/24

Markets

Starting in October last year, economists surveyed by Bloomberg had foreseen a recession with a 100% likelihood. However, the current situation is quite different. The Dow has been on a remarkable 10-day winning streak, and the S&P 500 is now merely a little over 5% away from reaching its record-high level. This week, Wall Street's attention will be firmly fixed on the Federal Reserve's interest rate announcement and a significant lineup of earnings reports.

Dow Rises Ahead of Busy Earnings Week, Fed Decision

Stocks kicked off a busy week marked by pivotal central-bank decisions and corporate earnings, particularly from tech giants like Microsoft and Alphabet, which have been significant drivers of this year's market strength.

Investors showed optimism in Mattel's shares, driving a 1.7% gain, as they anticipate a positive impact from the successful "Barbie" movie at the box office on the toymaker's business. On the other hand, AMC Entertainment's stock surged more than 30% after a court ruling rejected the movie-theater chain's plan to convert its preferred shares into regular stock.

The Federal Reserve is expected to raise rates by a quarter-percentage point on Wednesday, with the European Central Bank likely to follow suit a day later. Investors are uncertain whether these will be the final rate increases in this cycle for both institutions, with the Bank of Japan's decision coming later in the week.

Recent trading saw stocks inching higher, with the Dow industrials heading towards 11 consecutive days of gains. The S&P 500 and Nasdaq Composite also experienced increases, backed by the support of energy stocks like Chevron, which reported a better-than-expected quarterly profit and contributed to a 3% rise in its stock. Additionally, Brent crude, the global oil benchmark, rose 2.1% to trade at $82.80 a barrel.

Treasury yields showed a slight decline, with the benchmark 10-year U.S. Treasury yield slipping marginally from Friday's level. This decline is associated with rising bond prices.

Overseas stocks displayed mixed performance, with the Stoxx Europe 600 roughly flat while Hong Kong's Hang Seng Index slid 2.1%, and Japan's Nikkei 225 added 1.2%.

Meanwhile, wheat prices continued to climb as wheat futures in Chicago rose by more than 5%. The surge was triggered by Russia's attack on a Ukrainian terminal located on the Danube river.

Amidst these developments, there are signs of improvement in the manufacturing sector. S&P Global's U.S. preliminary purchasing managers index indicated that manufacturing activity in July is slowing down less dramatically than in previous months. On the other hand, services activity continues to grow, although at a reduced pace.

Entertainment

Barbenheimer was the real deal

In a definitive answer to the question of whether memes can translate to ticket sales, Barbie and Oppenheimer delivered an outstanding performance at North American movie theaters, making it the best weekend for the industry since Avengers: Endgame four years ago.

Greta Gerwig's Barbie movie had a spectacular debut, raking in an impressive $155 million, marking the best opening of the year and the highest domestic opening for a woman director in history. Similarly, Christopher Nolan's Oppenheimer, a historical drama about the father of the atomic bomb, grossed a remarkable $80.5 million, surpassing expectations of $50 million for an R-rated movie, and proving to be a major success.

The unique pairing of both critically acclaimed films played a significant role in their success, with many moviegoers deciding to see both movies on the same day in North America. Approximately 200,000 tickets were sold for Barbie and Oppenheimer combined during the weekend, as reported by the National Association of Theater Owners.

Barbenheimer's success offers some valuable insights into the preferences of modern audiences:

1. Audiences are looking for more than just a typical movie experience. Barbie provided a nostalgic and immersive experience, with fans dressing up in pink and reliving their childhood memories with the iconic doll. On the other hand, Oppenheimer enticed viewers with its awe-inspiring spectacle, drawing people to IMAX screens for a captivating cinematic adventure.

2. Fresh and original storytelling is highly sought after. Barbenheimer's success can be attributed to its two creatively ambitious films helmed by visionary directors, resonating with audiences who crave innovative and unique narratives. This triumph comes at a time when many studios have been heavily reliant on familiar and tired intellectual properties, with disappointing results from certain franchise sequels.

In conclusion, the movie industry celebrates the triumph of Barbenheimer, as it stands out amid a challenging period. The ongoing strike involving over 100,000 Hollywood actors and writers has put movie production and promotion on hold, leaving the industry seeking reasons to cheer. In this context, the success of these exceptional films serves as a ray of hope and a reminder of the power of originality and immersive storytelling in captivating audiences.

Tech

Elon renaming twitter to ‘X’

Elon Musk is making a bold move by eliminating Twitter's iconic bird logo. He announced his intention to replace the well-known bird symbol with an "X," and this change is expected to take effect soon. This decision comes as Musk pursues his vision of creating an "everything app" through a new company called X Corp. However, despite the rebranding, Twitter continues to face significant financial challenges. Recently, Cathie Wood's ARK Investment Management reduced its stake in Twitter by 47%, indicating the social media company's ongoing struggles with its financial performance.

Economy

Final Fed Rate Hike?

The Federal Reserve is expected to announce another interest rate increase this week, possibly marking the culmination of its 16-month effort to combat inflation. If the anticipated 25 basis point hike is implemented, it would bring interest rates to their highest level since 2001.