On Tuesday, stock futures suggested a mixed open, after a sharp NVDA selloff that blead over to other technology stocks.  The result was the most substantial single-day decline of the Nasdaq Composite’s since April. However, shares of Nvidia rebounded, climbing over 3% in overnight price action. This uptick comes on the heels of a previous session where Nvidia’s stock tumbled more than 6%, marking its sharpest drop since April 19, when it plummeted by 10%. The broader semiconductor sector also felt the heat, with companies like Super Micro Computer, Qualcomm, and Broadcom experiencing downward pressure on their stock prices.

European markets faced a downturn on Tuesday, mirroring the negative shift in U.S. market sentiment that marked the beginning of the week. The pan-European Stoxx 600 index, a key benchmark for regional equity performance, was particularly impacted during morning trading hours. The decline was led by the tech and industrial sectors, which saw significant selloffs

In the recent trading session, Japan’s Topix index surged, hitting its highest point in three weeks. Meanwhile, South Korea’s Kosdaq, primarily composed of small-cap stocks, rebounded, ending a three-day losing streak. Contrasting these gains, Mainland China’s CSI 300 experienced a decline, dropping by 0.54% to 3,457.90, marking its lowest level in four months. This downturn for the CSI 300 represents its weakest close since February 28. Despite this, the broader Asia-Pacific markets exhibited an upward trend.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday before the bell include SNX.  After the bell include FDX, PRGS, & WOR.

News & Technicals’

The European Commission, serving as the executive arm of the EU, has issued a preliminary statement indicating that Microsoft may have violated EU antitrust regulations. The concern arises from Microsoft’s practice of integrating its communication and collaboration tool, Teams, with its widely used business productivity suites, Office 365 and Microsoft 365. This integration is seen as potentially restricting competition by not providing consumers with a choice to opt out of Teams when purchasing the software packages. The investigation, which began in July 2023 following a complaint by Slack Technologies, suggests that Microsoft’s bundling of Teams might have unfairly given it a “distribution advantage” over other similar applications. Although Microsoft has begun offering some software bundles without Teams, the European Commission believes these measures are insufficient to fully restore competitive conditions. Microsoft has expressed its willingness to work with the Commission to address these concerns and find solutions that satisfy the regulatory body’s requirements for fair competition.

Airbus, the European aerospace corporation, experienced a notable 9% drop in its share price on Tuesday following an announcement that it would be revising its financial targets downward for the year 2024. The company has adjusted its expectations to forecast lower earnings before interest and taxes (EBIT) and a reduction in the number of commercial aircraft deliveries. Initially, Airbus had set a target of delivering around 800 aircraft; however, this number has now been scaled back to approximately 770. The revision of these targets is attributed to persistent supply chain challenges and unforeseen expenses in the space systems division, which have imposed additional costs amounting to roughly 900 million euros. These issues have compelled Airbus to delay its timeline for increasing the production of its A320 aircraft, further impacting its operational and financial projections for the year. The company’s half-year results, which are keenly anticipated, will be disclosed on July 30, providing further insights into the impact of these adjustments.

According to a recent report by Reuters, the Biden administration is investigating three Chinese telecommunications giants—China Mobile, China Telecom, and China Unicom. The probe is centered on concerns that these state-backed firms could potentially exploit their cloud and internet operations within the United States to allow Beijing access to sensitive American data. The Commerce Department is spearheading the investigation, which has involved subpoenas and risk-based analyses of China Mobile and China Telecom. Despite the companies’ limited presence in the U.S., primarily in cloud services and routing wholesale internet traffic, there is a fear that they could still access Americans’ data. This is significant because telecom regulators have previously barred these firms from providing telephone and retail internet services in the country.

The tech sector is hoping to rebound today after the sharp NVDA selloff worried tech investors spreading the selling other stocks in the sector.  With the GDP and Core PCE on the horizon keep an eye on the Consumer Confidence number which could provide some price volatility.   

Trade Wisely,

Doug