Morning in New York: Trump set to visit Fed - markets brace for volatility

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The unprecedented visit of US President Donald Trump to the Federal Reserve System will be in the focus of attention of trading participants on July 24. This will be a direct violation of the long-standing tradition of independence of the Central Bank and may become the main source of volatility. Market participants will track all the news from this meeting and the statements sounded at it. This event may affect expectations for monetary policy ahead of the July and further FOMC meetings. Against this background, the busy macroeconomic calendar may take a back seat.

The main macro release this Thursday will be the release of the preliminary PMI estimate from S&P Global. Freedom Broker forecasts that the industrial index will fall by 0.1 points to 52.8, reflecting a slowdown in new orders after a strong inventory replenishment in April and May in anticipation of import tariffs. In the benchmark indicator for the services sector, we see the same 0.1 point increase to 53. Moderately positive PMIs may revive the discussion about overheated demand. The data on initial jobless claims (Freedom Broker forecast: 230k vs. 221k a week earlier) and June new home sales (consensus: +4.3% mom) will complete the picture. The combination of higher jobless claims and weak home sales activity due to mortgage rates at 7% could act as a counterbalance to the strong PMIs, keeping the balance of rate expectations in the neutral zone.

Investors are still interested in information related to the prospects of artificial intelligence technologies. Political initiatives give a positive impetus to this segment. At the first-ever White House AI summit, President Trump presented a sweeping 90-point plan for the development of the industry and called for a unified and more favorable federal regulation of the sector. To confirm his intentions, he immediately signed three executive orders to implement key elements of said plan. Among them are measures to increase exports of U.S. AI technology, loosen environmental regulations to speed up infrastructure construction, and block the use of politically biased AI at the federal level. Praising chip makers such as Nvidia (NVDA) and Advanced Micro Devices (AMD), Trump emphasized the U.S. goal of becoming the absolute leader in the artificial intelligence industry.

The dynamics of individual shares will be determined by the reaction of stock exchange players to quarterly reports. Before the opening of the main session financial results will present Honeywell (HON), American Airlines (AAL), Blackstone (BX), Valero Energy (VLO), Dow (DOW) and Mobileye (MBLY). The postmarket will see reports from Intel (INTC), Newmont (NEM), Deckers Brands (DECK), Digital Realty Trust (DLR), Edwards Lifesciences (EW) and VeriSign (VRSN).

Futures on US indices show about zero dynamics. We assess the balance of risks as neutral with moderate volatility. We focus on S&P 500 movements in the range of 6300-6400 points (from -0.9% to +0.6% to the closing level of the previous session).

- Quotes Alphabet (GOOGL) on the postmarket rose by 1.8% amid the publication of the quarterly report. Revenue and earnings per share at the corporation amounted to $96.43 billion and $2.31 with a consensus of $93.99 billion and $2.18, respectively. A key positive signal for investors was management's decision to increase its capital expenditure plan for 2025 to $85 billion. This move, driven by strong demand for cloud services and the development of AI solutions, was seen as a sign of confidence in the future monetization of these areas.

- Shares of Tesla (TSLA) are down 2.8% after posting disappointing quarterly results. The company's revenue fell 12% YoY and vehicle deliveries declined 13.5% YoY. Management's attempt to shift investor focus to long-term prospects in AI and robotics failed to offset the current pressure on financials and shrinking margins. Management also warned of the "negative implications" of the One Big Beautiful Bill for the carmaker's business.

- Quotes of T-Mobile (TMUS) jumped 5.2% on the back of a strong report. The company posted record subscriber growth for the second quarter, and its service revenue increased 6% YoY to $17.4 billion. An important support for the stock was the improvement in the annual forecast of key financial and operating indicators.

- RevenueInternational Business Machines (IBM) for the second quarter rose nearly 8% YoY to $16.98 billion and EPS reached $2.8, with market expectations of $16.59 billion and $2.64, respectively. Nevertheless, the corporation's shares fell 5% in the post-market as investors were disappointed by revenues from its key software segment, which totaled $7.39 billion against a consensus of $7.43 billion. At the same time, results from its infrastructure and consulting division were above average forecasts.

- ServiceNow (NOW) soared 7.2% after the end of the main session as its second-quarter revenue climbed 22.5% YoY to $3.22 billion and adjusted EPS reached $4.09. A key driver of this performance growth was the shift to a subscription model, with user numbers up 21.5%. This was supported by record contract renewal rates reaching 98%.  Successful sales of AI products in the Now Assist segment allowed the company to raise its 2025 subscription revenue guideline to $12.78-12.80 billion.

Trading on July 23 on American stock exchanges ended with growth with the renewal of highs. S&P 500 rose by 0.78%, and Nasdaq 100 - by 0.43%, setting new absolute records amid news of trade negotiations. The Dow Jones added 1.14%, while the Russell 2000 gained 1.53%. The health care sector (XLV: +2.05%) was the leader of the growth thanks to strong quarterly results of a number of medtech representatives. Protective shares of utility companies (XLU: -0.75%) were the outsiders.

The main positive driver was reports that the US and the EU are close to a new trade agreement providing for a 15% duty on European imports. Brussels is apparently willing to agree to these terms to avoid the imposition of a 30% import tariff from August 1. The deal could also include the elimination of duties on airplanes, alcoholic beverages and medical equipment, while tariffs on automobiles would likely fall from 27.5% to an overall 15%. The potential deal would be part of Washington's broader trade strategy amid increasing domestic market protection.

Placement of 20-year treasury bonds of $13 bln was successful. Due to high demand, the yield was 1.6 bp lower than in the secondary market.

Secondary home sales for June totaled 3.93 million against a consensus of 4.01 million and a May result of 4.04 million. This dynamic indicates that high mortgage rates continue to deter buyer activity.

- Strong second-quarter organic sales growth supported quotes for the medical device company Thermo Fisher Scientific (TMO: +9.1%).

- Analysts noted the success of Boston Scientific (BSX: +4.5%) in the electrophysiology segment. The company's management improved its full-year guidance.

- A disappointing revenue outlook for the current quarter and expectations of a 20% cut in the addressable market triggered a selloff in Enphase Energy (ENPH: -14.2%) shares. The company intends to cut costs, but investors are already laying out a tougher scenario in the reallocation of subsidies and solar demand by 2026.

- Baker Hughes (BKR: +11.6%) beat expectations on key metrics: its adjusted EBITDA margin climbed 170 bps YoY, although revenue declined 3% YoY. Free cash flow also remains an issue amid active deals and rising capex.

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