Morning in New York: Investors Need New Benchmarks

A daily review and forecast of events in the U.S. stock market by Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

Participants in the upcoming trading sessions will focus on geopolitics, oil market dynamics, and corporate developments. The macroeconomic calendar does not include any significant releases.

The situation surrounding the Strait of Hormuz remains a key external risk. According to Reuters, the U.S. has not launched any new strikes against Iran in recent hours, and technical talks between the parties are continuing. The market may interpret this as a sign of de-escalation. Oil tanker traffic through the Strait of Hormuz remains severely restricted. This poses the threat of another spike in oil prices and fuels inflationary expectations.

One of the day’s major corporate events will be SK Hynix’s debut on the Nasdaq under the ticker symbol SKHY. The company raised $26.5 billion through an ADR offering priced at $149 per share, and according to Reuters, demand exceeded supply by more than seven times. A successful start to trading in these shares could boost interest in memory chip manufacturers and the entire semiconductor sector, especially given the ongoing shortage of components for AI infrastructure.

U.S. stock index futures are consolidating after yesterday’s rally. We assess the risk balance for the upcoming session as neutral, with moderate volatility. Support for buyers comes from stabilizing oil prices, steady demand for AI-related stocks, and SK Hynix’s successful IPO. Risks stem from the unstable situation around the Strait of Hormuz, as well as expectations regarding the earnings season kicking off on July 14 and the CPI data due out on the same day.

— WD-40 (WDFC) shares are up 13% following the release of strong quarterly results and an upward revision to its forecast for fiscal year 2026. The company’s sales increased by 24% to $195.1 million, while sales of maintenance products rose by 26%. The stock received additional support from the approval of a new share buyback program worth up to $100 million.

— Fermi (FRMI) shares are down nearly 13% following the announcement of a planned offering of $350 million in convertible senior bonds maturing in 2031.

— Solaris Energy Infrastructure (SEI) shares are up 4% on news that the company will be added to the S&P Small Cap 600 Index on July 15, replacing Catalyst Pharmaceuticals. This could generate additional technical demand from index funds and passive investment strategies.

— Remitly Global (RELY) shares are up 1% after the company received a license from the Central Bank of the UAE to operate in the prepaid money services sector. For the company, this is an important step in expanding its regulated presence in one of the world’s largest money transfer markets, where the annual cross-border volume is estimated at approximately $50 billion.

— Brookdale Senior Living (BKD) shares are down 8%, even though the weighted-average occupancy rate at its facilities rose by 200 basis points year-over-year in June, to 82.5%, and by 230 basis points year-over-year for the second quarter. The market’s negative reaction suggests that investors may have expected a more pronounced and sustained improvement following the recovery in the senior housing and care sector.

Trading on July 9 on U.S. stock markets ended with solid gains. The S&P 500 rose 0.81%, the NASDAQ 100 jumped 1.62%, the Dow Jones gained 0.27%, and the Russell 2000 rose 1.22%.

A key positive driver was the continued technical rebound following the recent sell-off, supported by falling Treasury yields and easing concerns about an uncontrolled escalation of the conflict in the Middle East. The rally once again spread beyond the technology sector. Small-cap stocks and balanced benchmarks saw increased demand.

Performance among the “Magnificent Seven” was mixed. Meta Platforms (META: +4.7% at the close of trading on July 9) was the most sought-after stock, as investors grew more confident in the prospects of the company’s medium-term AI strategy.

The financial sector (XLF: +2.18%) led the gains, buoyed by positive performance in the shares of banks and insurance companies. The laggards were consumer staples companies (XLP: −1.41%), which came under pressure from PepsiCo’s (PEP) weak financial results and Costco’s (COST) uncertain sales trends, as well as the energy sector (XLE: −1.4%), whose stocks tracked WTI crude oil, which fell in price due to a decline in the geopolitical risk premium.

The number of initial claims for unemployment benefits for the week was 215,000, compared with a consensus estimate of 217,000, and was lower than last week’s revised figure. The number of continuing claims, in line with average estimates, rose to 1.814 million. At the same time, existing-home sales in June fell by 2.4% month-over-month to 4.09 million on an annualized basis, compared with a forecast of 4.2 million. The report highlighted buyers’ high sensitivity to housing affordability issues due to expensive mortgage loans. Overall, this fits the scenario of a gradual slowdown in consumer activity.

The bond market provided additional support to the stock market: Treasury yields fell by 3–4 basis points across the entire yield curve, reversing the previous day’s spike. The $22 billion offering of 30-year government bonds was successful, as were the two previous auctions this week.

John Williams, President of the Federal Reserve Bank of New York, stated that the Open Market Committee continues to closely monitor inflation trends and emphasized the ongoing uncertainty regarding the prospects for reducing the Fed’s balance sheet.

Investors have generally adopted a wait-and-see stance ahead of the new week, whose macroeconomic agenda includes the release of inflation data (CPI and PPI), as well as Fed Chair Kevin Warsh’s testimony before Congress on the semi-annual report on monetary policy.

— Meta Platforms (META: +4.7%) shares rebounded following the release of new details about its AI strategy. Investors reacted positively to the launch of the Muse Spark 1.1 model for agent-based programming, as well as reports of plans to begin production of its own Iris AI chip as early as September. Some concerns regarding the return on Meta’s major investments in AI have been alleviated. Comments from CEO Mark Zuckerberg provided an additional positive, noting that while Meta is currently using its computing power for its own needs, high external demand will make its cloud business a promising avenue for monetizing its AI infrastructure.

— A consortium of private equity firms, including KKR, EQT, and Advent, is interested in acquiring Qiagen (QGEN: +10.5%). According to Bloomberg, the negotiations on this matter are in line with the biotech company’s management’s plans to explore strategic alternatives for business development.

— AstraZeneca (AZN: -5.7%) reported disappointing results from Phase III clinical trials of Wainua, a drug for the treatment of transthyretin amyloid cardiomyopathy (ATTR-CM). The study failed to meet its primary endpoints, seriously jeopardizing the company’s projections that peak sales of this drug would exceed $5 billion.

— The CEO of Applied Materials (AMAT: +3.2%) stated in an interview with Nikkei that demand for equipment is showing unprecedented transparency and stability, and that the company has a clear forecast for at least the next eight quarters.

— The decline in U.S. consumer purchasing power was clearly reflected in PepsiCo’s (PEP: -3.3%) quarterly results. Although the company’s revenue and adjusted earnings per share exceeded Wall Street’s average expectations, the report showed stagnant physical sales volumes in North America. This triggered a negative market reaction, even though management reaffirmed its full-year financial guidance.

This article was AI-translated and verified by a human editor