July 1st Market Overview

Happy Wednesday

The Dow hit another record while chips took a breather after carrying the market all year. Money keeps rotating into banks and blue chips instead of leaving. Warsh gave us nothing on July today, so tomorrow's jobs report is the ballgame. It's out a day early with markets closed Friday.

Let’s dig in...

Today's Big Picture

Warsh Keeps His Cards Close

The new Fed chair made his first public appearance since his debut meeting and wouldn't say whether a rate hike is coming this month. He called the late July meeting a "good family fight" and said the inflation outlook has improved, but also that "prices are too high." Traders put the odds of a July hike around one in three. Tomorrow's jobs report just became the biggest data point of the month.

Chips Cool Off While the Dow Hits a Record

Semiconductors sold off hard as investors booked profits on the best trade of the first half. Micron and Sandisk led the way down after both more than tripled last quarter, so some giveback was overdue. The money didn't leave the market, it rotated into banks and blue chips, which is why the Dow set a record on a day the Nasdaq fell. That's a healthy market, not a scared one.

Meta Wants to Be a Cloud Company

Meta plans to sell its excess AI computing power to outside customers, per Bloomberg. The stock had its best day since January while CoreWeave fell hard, since Meta would be competing with it directly. Turning your biggest cost into a revenue line is the dream every hyperscaler chases. Meta just said it out loud.

Market Overview

Index Performance

Stock Spotlight

General Mills $GIS ( ▲ 8.06% )  
beat on earnings and revenue after a year of cutting base prices. Management says the plan worked, and now comes protein Cheerios and bolder flavors to keep the momentum.

Shutterstock $SSTK ( ▼ 29.89% )  
lost nearly a third of its value after Getty Images $GETY walked away from their $3.7 billion merger. A UK regulator wanted Shutterstock to sell its editorial business, and Getty's board said no thanks.

Nike $NKE ( ▲ 3.61% )  
beat on the top and bottom lines, but Greater China sales fell again. Wall Street mostly stayed neutral on the turnaround, with Bernstein the lone bull pointing to 2027.

Big Name Updates

Walmart $WMT ( ▼ 3.88% )  
fell for a sixth straight day and now sits well below its May high. A rough stretch for a stock that could do no wrong the past three years.

General Motors $GM ( ▼ 2.2% )  
slipped after second quarter sales came in at 714,896 vehicles, down from a year ago. The expired federal EV tax credit is doing real damage to electric demand.

Tesla $TSLA ( ▲ 1.2% )  
reports second quarter deliveries as early as today, with estimates around 397,000. BYD already reported 557,090 fully electric deliveries, so the Chinese automaker likely retakes the global EV crown.

Kroger $KR ( ▲ 1.06% )  
agreed to buy Giant Eagle for $1.65 billion, adding nearly 200 stores across Pennsylvania, Ohio, and the mid-Atlantic in its turf war with Walmart.

Other Notable Company News

Alcoa $AA ( ▼ 9.47% )  
fell hard after agreeing to pay up to $5.6 billion for South32's bauxite, alumina, and aluminum assets. Investors question the timing with aluminum prices down sharply from their wartime highs.

Robinhood $HOOD ( ▲ 8.33% )  
rose after unveiling perpetual futures in Europe, tokenized stocks that trade around the clock, its own blockchain, and a Canada expansion. Bold moves for a company whose crypto revenue was nearly cut in half last quarter.

SpaceX $SPCX ( ▼ 8.09% )  
got a buy rating and $190 target from Wedbush's Dan Ives, who called it one of the best AI plays in the market. The stock fell anyway, caught in the tech selloff.

Strategy $MSTR ( ▲ 9.08% )  
and Coinbase $COIN bounced with bitcoin after a rough quarter for crypto.

Datadog $DDOG ( ▲ 1.5% )  
gained after buying Adaptive ML, an AI startup that deploys specialized agents.

Constellation Brands $STZ ( ▼ 2.12% )  
beat on earnings and revenue. Its new CEO says beer demand is coming back, helped by the World Cup and the Knicks title run.

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Sector Watch

Bond Market

Yields climbed overnight, then pulled back after Warsh said AI investment could expand the economy's productive capacity, with big implications for policy. The 10-year settled near 4.48 and the 2-year near 4.15.

Tomorrow's jobs report sets the tone for the July meeting. A hot number puts a hike squarely on the table.

Policy Watch

Fed

Warsh spent his Portugal appearance dodging rate questions on purpose. He wants the Fed to talk less, and he's living it.

• He reaffirmed the 2 percent inflation target is non-negotiable, even with the Fed's preferred gauge running at roughly double that.

• White House adviser Kevin Hassett pushed back the same morning, calling a rate hike "a macroeconomic mistake" in what he sees as a supply-driven boom.

• On the Supreme Court blocking Trump from firing Governor Lisa Cook, Warsh kept it simple: the Fed follows the law and stays independent.

The tension worth watching is Warsh versus his own White House. He was Trump's pick, and his first real test may be hiking rates over the president's objections.

Fiscal & Trade

The US decided against a long-term renewal of the USMCA trade deal with Canada and Mexico. It stays in force through its 10-year term, then moves to annual reviews. That trades certainty for leverage.

International

Peace talks in Qatar hit a snag as Iran said its delegates wouldn't meet with the US team. Oil slipped anyway, with Brent below $72, since Trump reportedly told aides he's fine letting talks run past the August 18 deadline.

Euro zone inflation cooled more than expected in June, easing pressure on the ECB after its first hike since 2023. The yen hit a fresh 40-year low against the dollar, and traders are watching for Tokyo to step in.

What to Watch

The AI company quietly automating every Walmart distribution center. 
23 billion in orders on the book.

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June Jobs Report, Thursday Morning

Out a day early because markets close Friday for the holiday. Economists expect around 115,000 jobs after ADP's private payroll number came in soft at 98,000. This is the single biggest input for the July rate decision.

Tesla Deliveries

Numbers could land any moment. US demand is the weak spot, Europe the surprise bright spot.

Iran Talks

Oil trades on every headline out of Qatar. Gas is at $3.84 a gallon heading into the weekend, the priciest July 4th in four years.

Thanks for reading - you are now the more informed 🙂

- John

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