U.S. stocks have a golden touch: Technology stocks have sounded the clarion call for counterattack. Can the earnings season ignite a new market for chip stocks?
Although there are still uncertainties in the geopolitical situation between the United States and Iran, the listing of SK Hynix has once again set off an AI investment boom in the market, and technology stocks have driven the S&P 500 index close to historical highs. With the start of a new round of earnings season, the risk of market volatility does not seem to have been resolved. Whether artificial intelligence can unleash sufficient profit growth has attracted attention. The impact of multiple heavy-hitting economic data on expectations of the Federal Reserve's interest rate hikes is also critical, which may disrupt risk appetite and capital flows. Expectations for the Federal Reserve to raise interest rates have increased. This week's economic data calendar is generally light. Many U.S. service industry prosperity indicators maintain expansion, and the job market remains stable.
Although there are still uncertainties in the geopolitical situation between the United States and Iran, the listing of SK Hynix has once again set off an AI investment boom in the market, and technology stocks have driven the S&P 500 index close to historical highs. With the start of a new round of earnings season, the risk of market volatility does not seem to have been resolved. Whether artificial intelligence can unleash sufficient profit growth has attracted attention. The impact of multiple heavy-hitting economic data on expectations of the Federal Reserve's interest rate hikes is also critical, which may disrupt risk appetite and capital flows. Fed rate hike expectations rise This week's economic data calendar is generally light, with many U.S. service industry prosperity indicators maintaining expansion and the job market remaining stable. The U.S. ISM non-manufacturing index read 54.0 in June, lower than 54.5 in May and in line with market expectations. The slight decline was due to the slowdown in the growth rates of business activities and new orders. The good news is that the price index hit a four-month low, which may indicate that inflationary pressures have peaked. The S&P Global U.S. Services PMI rose to 51.2 in June from 50.7 in May, maintaining the expansion range. In terms of the labor force, the number of people filing for initial unemployment benefits in the United States last week was 215,000, a decrease of 2,000 from the previously upwardly revised 217,000, and lower than the expected 220,000; the number of people continuing to apply for unemployment benefits increased by 8,000 month-on-month, reaching a seasonally adjusted 1.81 million, which continues to be at a historical low. The Atlanta Fed's GDPNow real-time second-quarter GDP forecast has been slightly revised upward by 0.1 percentage points to 1.3%. The minutes of the Federal Reserve meeting showed that the views within the committee members were divided: some officials advocated keeping the federal funds rate unchanged, while others believed that at least one rate increase was needed during the year; and a "small number of participating officials" said that there was sufficient evidence to support an immediate interest rate increase at the June meeting. Bob Schwartz, senior economist at Oxford Economics, said in an interview with China Business News that inflation is the primary concern of Federal Reserve policymakers. Concerns about a downturn in the job market have eased, and some officials believe there is a case for raising interest rates. As long as the labor market remains stable, if factors such as geopolitical conflicts, AI-induced demand, and tariffs continue to push up inflation, almost all members of the Federal Open Market Committee (FOMC) will support tightening monetary policy. This week, U.S. bond yields of all maturities rose simultaneously. The core drivers were the breakdown of the U.S.-Iran ceasefire and rising oil prices. The 2-year U.S. bond, which is closely related to interest rate expectations, rose by about 7 basis points to 4.204%, and the benchmark 10-year U.S. bond rose by about 8 basis points to 4.561%. Market expectations for the Federal Reserve to raise interest rates have increased. The Bloomberg interest rate probability model forecast shows that the probability of an interest rate hike at the September interest rate meeting has risen to 84%. Previously, the market had fully priced in an interest rate hike for the first time in December, and it has now been advanced to the October interest rate meeting. Schwartz told China Business News that although the labor market is roughly in balance between supply and demand, the probability of further overheating in the future is small. He reiterated his preference for the Fed to maintain interest rates on the sidelines for a long time, rather than raising interest rates. Overall inflation may have peaked in May and will gradually decline thereafter; however, inflation-disturbing variables such as the US-Iran conflict and overheating demand for AI may disrupt this downward inflation expectation. The major U.S. stock indexes have diverged this week; the conflict in the Middle East dragged down the Dow, and the growth sector drove the Nasdaq and S&P 500 to close higher. The S&P 500 is less than 1% away from its all-time high. Sectors showed differentiation. Dow Jones market statistics showed that the technology sector led the way with a surge of 3.4%; the energy sector rose by 3.2%; the communication services sector rose by 2.3%; consumer discretionary and financial sectors closed slightly higher. The raw materials sector fell 2.2%; the healthcare, consumer staples and industrial sectors fell more than 1%; the public utilities and real estate sectors weakened slightly. Five stocks of the "Seven Big Tech Companies" in the U.S. stock market ended up this week, among which Meta's cumulative increase was close to 15%, marking its best weekly performance since the beginning of 2024. Bank of America maintains a "buy" rating on Meta. An internal memo from Meta shows that the company is expected to optimize the cost structure of its AI business, which will benefit long-term profitability. At the same time, the company plans to rent out its own AI computing resources to open a new growth curve.
The earnings reporting season will officially begin next week, with six major Wall Street banks taking the lead: JPMorgan Chase, Bank of America, Goldman Sachs, Wells Fargo, Citigroup and Morgan Stanley. Many investors are particularly concerned about TSMC and ASML. The performance of these two companies may affect the restart of chip stocks. Charles Schwab wrote in a market commentary that the war in the Strait of Hormuz reignited this week, coupled with Trump's announcement that the US-Iran ceasefire agreement has expired, the market was once violently shaken. As long as oil prices maintain a moderate range, the short-term market focus will fully shift to the fundamentals of the U.S. economy and the second-quarter earnings season that officially starts next week. But conversely, the longer the conflict between the United States and Iran lasts, the higher the probability of oil prices rising, which will theoretically increase the possibility of the Federal Reserve raising interest rates. In the coming week, on the main line of financial reports, six major Wall Street banks will disclose their performance on the 14th and 15th; semiconductor equipment leaders ASML and TSMC will also release financial reports; in terms of macro data, June's consumer price index (CPI), producer price index (PPI) and retail sales monthly figures will be released one after another; in addition, Federal Reserve Chairman Kevin Warsh will deliver his first semi-annual congressional hearing speech since taking office. The agency believes that the Philadelphia Semiconductor Index still needs to verify the effectiveness of the support next week. If the chip sector loses support, market funds may only rotate internally to other sectors; however, if chip stocks weaken significantly, it will also significantly dampen the market's overall risk appetite. In addition, July itself has seasonal bullish attributes, and strong earnings expectations during the earnings season will further strengthen the logic that the economic fundamentals are good. Taking all factors into account, investors still need to guard against escalating market volatility. (
The earnings reporting season will officially begin next week, with six major Wall Street banks taking the lead: JPMorgan Chase, Bank of America, Goldman Sachs, Wells Fargo, Citigroup and Morgan Stanley. Many investors are particularly concerned about TSMC and ASML. The performance of these two companies may affect the restart of chip stocks. Charles Schwab wrote in a market commentary that the war in the Strait of Hormuz reignited this week, coupled with Trump's announcement that the US-Iran ceasefire agreement has expired, the market was once violently shaken. As long as oil prices maintain a moderate range, the short-term market focus will fully shift to the fundamentals of the U.S. economy and the second-quarter earnings season that officially starts next week. But conversely, the longer the conflict between the United States and Iran lasts, the higher the probability of oil prices rising, which will theoretically increase the possibility of the Federal Reserve raising interest rates. In the coming week, on the main line of financial reports, six major Wall Street banks will disclose their performance on the 14th and 15th; semiconductor equipment leaders ASML and TSMC will also release financial reports; in terms of macro data, June's consumer price index (CPI), producer price index (PPI) and retail sales monthly figures will be released one after another; in addition, Federal Reserve Chairman Kevin Warsh will deliver his first semi-annual congressional hearing speech since taking office. The agency believes that the Philadelphia Semiconductor Index still needs to verify the effectiveness of the support next week. If the chip sector loses support, market funds may only rotate internally to other sectors; however, if chip stocks weaken significantly, it will also significantly dampen the market's overall risk appetite. In addition, July itself has seasonal bullish attributes, and strong earnings expectations during the earnings season will further strengthen the logic that the economic fundamentals are good. Taking all factors into account, investors still need to guard against escalating market volatility. (