EBC Markets Briefing | Dow hit all-time peak on bout of buoyant earnings

The S&P 500 and the Dow closed at record highs on Tuesday, powered by ​the latest batch of earnings, as crude prices and Treasury yields ‌dropped on hopes for a deal in the Iran war.

Earnings have been strong this quarter, showing a 29.3% growth rate from the approximately 300 companies in the S&P 500 that have reported earnings through Friday, according to LSEG data.

This earnings season, investors are laser-focused on AI companies balance sheets, searching for early signs that their massive infrastructure investments will actually pay off.

Hedge funds notched trading losses last month from crowded bets on tech stocks as markets turned sour, preventing speculators from exiting at more profitable levels, JPMorgan said ⁠in the note.

Goldman Sachs also reported a challenging July, with global stock pickers suffering their second-worst monthly performance in four years and Asia-based managers enduring their worst month on record.

In July, US manufacturing activity reached a four-year peak, driven by a surge in new orders. The return to growth in manufacturing employment for the first time in 33 months was cheered by economists.

EBC Financial Group analyst says, the Dow staged a powerful breakout late in the month. Traders should look for minor pullbacks or consolidation patterns toward the 53,200 support level to build long positions.

Asset Recap

As of market close on 4 August, among EBC major products, Intel shares led gains as investors locked in gains after a surge and grew more cautious about elevated valuation expectations.

Rockwell Automation stock took a heavy hit, even though the quarter delivered firm profit progress. The key question is whether the price premium remains justified, which sparked the selloff.

Nerves about AI roiled markets earlier this summer, but a strong earnings season, rotation into different sectors and rebound in tech have helped lift the Nasdaq 100 back toward record highs.

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EBC Financial Group Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Global Financial Collaboration or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.