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Major US stock indices close that session lows with the broader indices having their worst trading day since the end of 2022.

• NASDAQ index has its worst day since November 2 2022. The NASDAQ is closing down -3.64%
• S&P index has its worst day since December 15, 2022. The S&P is closing down -2.32%

The late day selling has pushed the NASDAQ index below its 38.2% retracement of its last trend move higher from the May 21 low:

The Dow industrial average fell -1.29% just last week. Today it stumbled by -1.25%.

A look at the final numbers shows:

• Dow Industrial Average average fell -504.22 points or -1.25% at 39853.86. The close is back below the 40,000 level.
• S&P index fell -128.63 points or -2.32% at 5427.12
• NASDAQ index fell -654.94 points or -3.64% at 17342.41.

From its most recent high, the NASDAQ has fallen -7.20%.

For the Magnificent 7, from most recent highs to low prices today, five of the seven have fallen over 10% with Tesla down -20.77% from its most recent highs.

• Meta Platforms is down -15.5% from its high
• Amazon is down -10.3% from its high
• Nvidia is down -19.41% from its high
• Apple is down -8.18% from its high
• Alphabet is down -10.39% from its high
• Microsoft is down -8.70% from its high
• Tesla is down -20.77% from its high

This article was written by Greg Michalowski at www.forexlive.com.

Israeli PM Netanyahu is addressing U.S. Congress. He will meet individually with Pres. Biden and VP Harris and will also meet with GOP nominee Trump tomorrow.

Says:

• America and Israel must stand together
• Came to assure you of one thing, that we will win.
• Actively engaged in intensive efforts to secure hostages release.
• Thanks Biden for his heartfelt support for Israel
• anti-Israel protesters it should be ashamed of themselves.

This article was written by Greg Michalowski at www.forexlive.com.

• High-yield 4.121%
• WI level at the time of the auction 4.110%
• Tail 1.1 basis point versus a six month average of 0.5%
• Bid to cover 2.40X versus six month average of 2.36X
• Dealers 13.97% vs six month average of 16.3%
• Directs (domestic investors) 18.78% vs six month average of 17.9%
• Indirects (international investors) 67.25% versus the six month average of 65.8%

Overall grade: B

• The good: Dealers take less than the average because both domestic and international buying was modestly above average levels.
• The average: Bid to cover was near the 6-month average
• The not so good: The tail of 1.1 basis points above the WI level at the time of the auction was higher and above the 6 month average.

This article was written by Greg Michalowski at www.forexlive.com.

The U.S. Treasury will auction off $70 billion of five-year note at the top of the hour. The success or failure of the auction will be dependent on the components and their relationship to the six month averages. More specifically:

• Tail 0.5 basis points
• Bid to Cover 2.36X
• Directs 17.9%
• Indirects 65.8%
• Dealers 15.3%

The last option high-yield was at 4.331% which also had a negative tail of -0.4 basis points. THe Bid to cover was near the average at 2.35X

This article was written by Greg Michalowski at www.forexlive.com.

Major European indices moved and closed lower on the day. The declines were led by German DAX and France CAC.. Germany’s flash services and manufacturing indices were lower than expectations. France’s manufacturing index was lower while its service index did move back above the 50 level after dipping below the key growth/no growth 50 level last month.

The final numbers showed:

• German DAX -0.92%
• France CAC, -1.12%
• UK FTSE 100 -0.17%
• Spain’s Ibex -0.02%
• Italy’s FTSE MIB -0.48%

US stocks have fared worse in trading today. Currently,

• Dow Industrial Average average, -0.76%
• S&P index -1.7%
• NASDAQ index -2.8%

The small-cap Russell 2000 is faring better than all them with a decline of only -0.25%.

After earnings yesterday:

• Alphabet shares are down -4.82% despite beating on the top and bottom line. Revenues from YouTube or lesson expectations.
• Tesla based on their expectations and is currently trading down -10.10%.

Other Magnificent 7 shares are also lower:

• Meta Platforms -4.12%. It’s stop tried to rise back above its 100 day moving average yesterday at $490.93, but has gapped lower and currently trades at $468.22
• Amazon -2.53%
• Nvidia -5.4% despite Alphabet saying there investment in capital was rising due to AI initiatives (including chips)
• Apple -2.88%
• Microsoft -3.40%.

Microsoft, Meta Platforms, Amazon, and Apple are all scheduled to release earnings next week:

• Microsoft, July 31
• Meta Platforms, July 31
• Amazon, August 1
• Apple, August 1

Nvidia does not release their earnings until mid August:

• Nvidia, August 15

This article was written by Greg Michalowski at www.forexlive.com.

US stocks continue to move lower. The NASDAQ index is leading the way with a client of -2.17% at 17606.71. The S&P index is down 83 points or -1.5% at 5472.73.

For the NASDAQ index it is currently trading at the lowest level since June 25. Last Tuesday, the price fell -2.77%.

The S&P decline of 1.5% is its largest decline since a-1.57% on April 30.

This article was written by Greg Michalowski at www.forexlive.com.

The private oil inventory data released late yesterday showed another drawdown in crude oil stocks. Gasoline, distilates and Cushing all showed drawdowns as well:

The EIA numbers are now out showing:

• Crude oil drawdown of -3.741M vs drawdown of -1.583M estimate
• Distilates drawdown of -2.753M vs build of +0.249M estimate.
• Gasoline drawdown of -5.572M vs drawdown of -0.391M estimate

The drawdowns continue.

Crude oil is trading higher at $77.71. Just prior to the release, the price was at $77.37 up $0.41 or 0.53%.

Technically, the price needs to get above its 200 day moving average at $78.73 increase the bullish bias.

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This article was written by Greg Michalowski at www.forexlive.com.

Overnight, Fed’s Dudley to Bloomberg said that:

• Historically deteriorating labor markets generate a self reinforcing feedback loop
• When jobs are hard to find, household trim spending, the economy weakens, and businesses reduce investment, which leads to layoffs and further spending cuts.
• Although it might already ready to fend off a recession, dawdling now unnecessarily increases the risk

Job losses beget job losses. Dudley is fearful that the momentum has already started and that will continually weaken the economy.

US stocks are sharply lower with the NASDAQ now down -2.10%. The S&P is down -1.48%.

This article was written by Greg Michalowski at www.forexlive.com.

• Prior month 0.619M annualized (lowest level since December 2023. The high level came in at 0.693M annualized pace) revised to 0.621M
• New-home sales 0.617M which is lower than the estimate of 0.640M

Details:

• Sales of New Single-Family Houses:

  • June 2024: Seasonally adjusted annual rate of 617,000
  • 0.6% below the revised May rate of 621,000
  • 7.4% below the June 2023 estimate of 666,000

• Sales Price:

  • Median sales price: $417,300 flat YoY.
  • Average sales price: $487,200

• Inventory and Months’ Supply:

  • Seasonally-adjusted estimate of new houses for sale at the end of June: 476,000
  • Represents a supply of 9.3 months at the current sales rate

The new home supply is up to 9.3 months unchanged from May but still very high. Existing home sales supply is much lower.The number is on sign contracts in June when interest rates stayed above 7% or all of the month. The rate is now back down at 6.83%. So there may be some bounce back.

Nevertheless despite the decline affordability is tough and with the worries of a slowing economy, it could be a problem for housing.

This article was written by Greg Michalowski at www.forexlive.com.

The Bank of Canada cut rate by 25 basis points to 4.5%.

Highlights from the Macklem’s prepared text:

• BoC lowered the policy interest rate by 25 basis points to 4.5%.
• Key considerations for the decision:
  • Monetary policy is easing broad price pressures.
  • Economy has excess supply and slack in the labor market, allowing for growth without inflation.
  • Balancing risk of higher-than-expected inflation with risk of weaker-than-expected economy and inflation.
• Inflation is expected to moderate, with progress being uneven due to opposing forces.
• Further interest rate cuts are possible if inflation eases as forecasted; decisions will be made based on evolving economic conditions.
• Economic growth in Canada remains weak relative to population growth; household spending is soft and debt payments are high.
• The labor market shows some slack, with a rising unemployment rate and moderating wage growth.
• Economic growth is expected to increase in the latter half of 2024 and through 2025 due to stronger exports, recovery in household spending, and robust residential investment.
• CPI inflation moderated to 2.7% in June; core inflation measures have been below 3% for several months.
• Inflation in shelter and wage-affected services remains high.
• Core inflation is expected to slow to about 2.5% in the second half of 2024 and ease further in 2025.
• CPI inflation is forecast to settle around the 2% target next year, though not in a straight line.
• Risks to the inflation outlook include geopolitical uncertainty and potential weaker household spending in Canada.
• BoC is committed to restoring price stability for Canadians.

The full statement from the Bank of Canada:

The Bank of Canada today reduced its target for the overnight rate to 4½%, with the Bank Rate at 4¾% and the deposit rate at 4½%. The Bank is continuing its policy of balance sheet normalization.

The global economy is expected to continue expanding at an annual rate of about 3% through 2026. While inflation is still above central bank targets in most advanced economies, it is forecast to ease gradually. In the United States, the anticipated economic slowdown is materializing, with consumption growth moderating. US inflation looks to have resumed its downward path. In the euro area, growth is picking up following a weak 2023. China’s economy is growing modestly, with weak domestic demand partially offset by strong exports. Global financial conditions have eased, with lower bond yields, buoyant equity prices, and robust corporate debt issuance. The Canadian dollar has been relatively stable and oil prices are around the levels assumed in April’s Monetary Policy Report (MPR).

In Canada, economic growth likely picked up to about 1½% through the first half of this year. However, with robust population growth of about 3%, the economy’s potential output is still growing faster than GDP, which means excess supply has increased. Household spending, including both consumer purchases and housing, has been weak. There are signs of slack in the labour market. The unemployment rate has risen to 6.4%, with employment continuing to grow more slowly than the labour force and job seekers taking longer to find work. Wage growth is showing some signs of moderating, but remains elevated.

GDP growth is forecast to increase in the second half of 2024 and through 2025. This reflects stronger exports and a recovery in household spending and business investment as borrowing costs ease. Residential investment is expected to grow robustly. With new government limits on admissions of non-permanent residents, population growth should slow in 2025.

Overall, the Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.4% in 2026. The strengthening economy will gradually absorb excess supply through 2025 and into 2026.

CPI inflation moderated to 2.7% in June after increasing in May. Broad inflationary pressures are easing. The Bank’s preferred measures of core inflation have been below 3% for several months and the breadth of price increases across components of the CPI is now near its historical norm. Shelter price inflation remains high, driven by rent and mortgage interest costs, and is still the biggest contributor to total inflation. Inflation is also elevated in services that are closely affected by wages, such as restaurants and personal care.

The Bank’s preferred measures of core inflation are expected to slow to about 2½% in the second half of 2024 and ease gradually through 2025. The Bank expects CPI inflation to come down below core inflation in the second half of this year, largely because of base year effects on gasoline prices. As those effects wear off, CPI inflation may edge up again before settling around the 2% target next year.

With broad price pressures continuing to ease and inflation expected to move closer to 2%, Governing Council decided to reduce the policy interest rate by a further 25 basis points. Ongoing excess supply is lowering inflationary pressures. At the same time, price pressures in some important parts of the economy—notably shelter and some other services—are holding inflation up. Governing Council is carefully assessing these opposing forces on inflation. Monetary policy decisions will be guided by incoming information and our assessment of their implications for the inflation outlook. The Bank remains resolute in its commitment to restoring price stability for Canadians.

This article was written by Greg Michalowski at www.forexlive.com.

• Services PMI 56.0 vs. 55.0 expected and 55.3 prior.
• Manufacturing PMI 49.5 vs. 51.7 expected and 51.6 prior.
• Composite PMI 55.0 vs. 54.8 prior.

Key Findings:

• Flash US PMI Composite Output Index(1) at 55.0
  (June: 54.8). 27-month high.
• Flash US Services Business Activity Index(2) at 56.0
  (June: 55.3). 28-month high.
• Flash US Manufacturing Output Index(4) at 49.5
  (June: 52.1). 6-month low.
• Flash US Manufacturing PMI(3) at 49.5 (June: 51.6).
  7-month low.

Comment:

Commenting on the data, Chris Williamson, Chief Business
Economist at S&P Global Market Intelligence said:

“The flash PMI data signal a ‘Goldilocks’ scenario at the
start of the third quarter, with the economy growing at a
robust pace while inflation moderates.”

“Output across manufacturing and services is expanding
at the strongest rate for over two years in July, the survey
data indicative of GDP rising at an annualized rate of 2.5%
after a 2.0% gain was signaled for the second quarter.”

“The rate of increase of average prices charged for goods
and services has meanwhile slowed further, dropping to a
level consistent with the Fed’s 2% target.”

“The good news is qualified, however, with both the growth
and inflation pictures containing some worrying elements
to monitor in the coming months.”

“From the output perspective, growth has become
worryingly skewed, with manufacturing slipping back into
contraction as the service sector gains further strength.
Some of the production decline was linked to staff
shortages, so could prove temporary – something which is
supported by the sector reporting improved confidence
about future growth prospects. However, both
manufacturers and service providers are reporting
heightened uncertainty around the election, which is dampening investment and hiring.”

“In terms of inflation, the July survey saw input costs rise
at an increased rate, linked to rising raw material, shipping
and labour costs. These higher costs could feed through
to higher selling prices if sustained, or cause a squeeze on
margins.”

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The USDJPY continues its run to the downside and trades to the lowest levels since May 16. In the process, the price is moving below the 50% of the move up from the March low. That level comes in at 154.209 and is now close resistance. The low from May 16 comes in at 154.57. That is the next target for sellers.

Yesterday, the USDJPY fell below the 100 day MA and the swing low from last week at 155.368 shifting the bias more to the downside. The breaking of the 50% of the move up from the March low is another key target to get to and through

GBPJPY continues to run lower and looks toward the next targets at 198.38 and then the 50% of the move up from the March low at 198.03.

The EURJPY is breaking below its 50% and the 100 day MA at 167.79. Stay below is more bearish (see chart below). The price is trading at the lowest level since May 9. Staying below those two technical levels keeps the sellers in firm control.

This article was written by Greg Michalowski at www.forexlive.com.