Morning in New York: News Flow Will Drive Volatility

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

The escalation of the conflict in the Middle East remains one of the main factors influencing investor sentiment. The U.S. has been carrying out strikes on Iranian territory for the third night in a row. President Donald Trump announced the reinstatement of a naval blockade on Iranian shipping and his intention to levy a 20% fee on the value of cargo transported through the Strait of Hormuz. Despite the intensifying sanctions pressure, Iranian Oil Minister Mohsen Paknejad stated that exports are continuing as usual. Persistent geopolitical tensions are fueling inflationary risks and remain one of the key factors driving oil prices and global stock markets.

The main macroeconomic event of the day will be the release of the June Consumer Price Index (CPI). The consensus forecast calls for a 0.1% month-over-month (m/m) decline in the headline CPI and a 3.8% year-over-year (y/y) increase, with the core CPI rising 0.2% m/m and 2.8% y/y. Freedom Broker’s forecast for the core CPI aligns with the consensus, but the hundredths of a percentage point will be key. A reading below 0.2% MoM would signal a resumption of disinflation and support “growth” stocks. A reading of 0.25% MoM or higher would confirm that sustained price pressures remain and could reinforce expectations of a longer period of high interest rates. Also this Tuesday, the NFIB Small Business Optimism Index for June will be released (consensus: 95.7 points; May: 95.3).

Today, Federal Reserve Chairman Kevin Warsh will testify before the U.S. House of Representatives Financial Services Committee to present a report on monetary policy. Investors will be closely watching his assessment of the state of the economy and the future course of monetary policy.

The corporate earnings season in the U.S. kicks off today with the release of results from the country’s largest banks. Before the market opens, the major U.S. banks—Citigroup (C), J.P. Morgan Chase (JPM), Goldman Sachs (GS), Bank of America (BAC), Wells Fargo (WFC), Fastenal (FAST), and AngioDynamics (ANGO) will present their quarterly results before the market opens. After the market closes, Aehr Test Systems (AEHR) and Kestra Medical Technologies (KMTS) will release their earnings reports. The results from the leading banks will set the tone for the entire season and will largely determine the direction of the financial sector in the coming days.

Futures on U.S. stock indices are trading near zero. We assess the risk outlook for the upcoming session as neutral, with high volatility.

— Lulu's Fashion Lounge (LVLU) rose more than 25% following the announcement that it had begun exploring strategic alternatives. Investors reacted positively to the possibility of a sale of the company or other transactions aimed at increasing its shareholder value.

— Trex’s (TREX) preliminary second-quarter results and an upward revision to its 2026 revenue forecast, driven by steady demand for its products, led to a 2% increase in the company’s stock price.

— A change in leadership at MBX Biosciences (MBX) caused the company’s stock to drop by more than 6%. Steve Herter, chairman of the board of directors, will assume the role of CEO, and interim CFO John Smither has been confirmed in the position on a permanent basis.

— Penguin Solutions (PENG) is down about 5% following the announcement of a $650 million offering of convertible bonds maturing in 2031. The company will use the proceeds to refinance a portion of its existing convertible bonds, repay a $100 million bank loan, and fund general corporate purposes.

— Q32 Bio (QTTB) shares fell by about 7% following the announcement that the company had raised $200 million through a stock offering and prepaid warrants. The proceeds will be used to advance clinical programs.

Trading on July 13 on U.S. stock markets ended in the red. The S&P 500 lost 0.79%, the NASDAQ 100 fell 1.88%, the Dow Jones fell by 0.26%, and the Russell 2000 dropped by 0.83%. Prices came under pressure from escalating geopolitical tensions and another round of profit-taking in technology stocks. The equally weighted S&P 500 outperformed the “classic” index by more than 75 basis points, indicating that the sell-off was concentrated in large-cap stocks.

Energy stocks (XLE: +3.03%) led the gains following another spike in oil prices amid the escalating conflict in the Middle East. The tech sector (XLK: -2.42%) was the underperformer. Among the “Magnificent Seven,” Tesla (TSLA: -3.19%) and NVIDIA (NVDA: -3.52%) underperformed the market.

Following Donald Trump’s statements about imposing a toll for passage through the Strait of Hormuz, WTI prices soared by 9.4%, while yields on U.S. Treasury bonds rose by 4–7 basis points, heightening concerns about mounting inflationary pressures.

Federal Reserve Board member Christopher Waller said he would support keeping interest rates at their current level as inflation continues to slow, but warned that rising inflationary pressures due to new import tariffs could require a tightening of monetary policy.

— TriCo Bancshares (TCBK: +12%) has agreed to be acquired by First Hawaiian (FHB: -3.3%) in an all-stock deal valued at approximately $2 billion. The offer calls for a payment of $63.12 per share, representing a premium of about 18% over the previous session’s closing price. The deal will allow First Hawaiian to significantly expand its presence in the California banking market.

— Meta Platforms (META: -1.9%) announced that it is expanding its computing capacity for artificial intelligence development at its largest data center, Hyperion, in Louisiana, to 5 GW. Total investment in the project will exceed $250 billion. The news confirmed the company’s intention to continue large-scale development of its AI infrastructure.

— According to Bloomberg, CCC Intelligent Solutions (CCC: +5.2%) has caught the attention of Elliott Investment Management, which has acquired a significant stake in the company. Previously, the software developer had engaged Morgan Stanley to evaluate strategic options for its future, including a sale of the business.

— Taiwan Semiconductor Manufacturing (TSM: -2.9%) reported a 68% year-over-year increase in revenue for June. For the second quarter, the company’s sales rose 36% year-over-year, slightly exceeding consensus estimates. These strong results indicate continued high demand for AI chips and support expectations of further growth in the company’s financial performance.

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