🧪 BOJ Rate Hike

Plus: MSFT Disappoints

July 31, 2024

Good Morning!

This week, we're diving into the gold rush triggered by Middle East tensions and a dovish Fed. We've got three stocks primed for a plunge and my account of making $70,536 in just 60 days.

Plus, get the lowdown on the BOJ's rate hike shakeup and the Fed's steady hand, with U.S. futures on the rise thanks to a flurry of corporate earnings. Microsoft’s cloud hiccup and Meta’s anticipated revenue leap are making waves. Ready for the full scoop? Dive in – the market waits for no one.

Let’s get into it 👇

🌡 Market Temperature Check

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📰 What’s Moving The Markets?

BOJ Kicks Off the Rate Hike Parade

The Bank of Japan (BOJ) made headlines this week by raising its overnight call rate target to 0.25% from the previous range of 0-0.1%. This bold move marks a big shift from a decade of substantial monetary stimulus. The BOJ plans to cut monthly bond purchases to 3 trillion by 2026.

This change comes with improving inflation and stronger spending, boosting the bank’s forecast of hitting its 2% annual target. Meanwhile, on the U.S. side of the pond, the Federal Reserve is expected to keep its benchmark interest rate in the 5.25%-5.50% range, with futures suggesting a possible rate cut in September.

U.S. Futures Rise Amid Earnings Reports

U.S. stock futures got a nice bump on Wednesday as investors awaited the Federal Reserve’s latest meeting conclusion and parsed through a bunch of corporate earnings. Dow futures went up by 0.2%, S&P 500 futures climbed 0.8%, and Nasdaq 100 futures jumped 1.3%.

We’re looking at earnings reports from big names like Meta Platforms, Boeing, Qualcomm, Etsy, and Carvana. As July wraps up, the S&P 500 and Nasdaq Composite is on track to close the month lower, with the Nasdaq down over 3%. On the flip side, the Dow Jones Industrial Average is set to end the month over 4% higher.

Microsoft’s Cloud Business Disappoints

Microsoft’s latest earnings report showed a slowdown in its cloud business growth, with Azure growing by 29%, down from 31% in the previous quarter. Despite pouring more money into AI infrastructure, the tech giant suggested that the payoff might take longer than expected. This news initially dropped Microsoft’s shares by 7%, though they bounced back a bit to a 4% drop after an earnings call, where the company forecasted faster Azure growth in the second half of fiscal 2025.

On a brighter note, Advanced Micro Devices (AMD) boosted its AI chip sales forecast for 2024 by $500 million, indicating strong demand in the sector.

Meta Anticipates Revenue Jump

Meta Platforms is set to report its second-quarter earnings, with expectations of a 20% rise in revenue thanks to strong ad sales driven by the Olympics and elections. Investors are eager to see if Meta’s hefty spending on AI infrastructure is starting to pay off. The company’s total expense estimate for the year has been bumped up to between $96 billion and $99 billion.

In other news, Meta recently reached a $1.4 billion settlement with Texas over the alleged misuse of biometric data.

✍ TL;DR

  • BOJ Rate Hike: Bank of Japan raises overnight call rate to 0.25%, signaling a shift from long-term monetary stimulus.

  • US Fed: Expected to maintain current interest rates with potential rate cut in September.

  • US Futures Rise: Dow up 0.2%, S&P 500 up 0.8%, Nasdaq 100 up 1.3%, driven by earnings reports from major companies.

  • Microsoft: Cloud business growth slows, Azure grows by 29%, shares initially drop by 7%, recover slightly.

  • AMD: Raises AI chip sales forecast for 2024 by $500 million.

  • Meta Platforms: Expected 20% revenue increase, boosted by ad sales from Olympics and elections, settles $1.4 billion biometric data misuse case.

Stay ahead, stay informed, and most importantly, stay profitable.

‘til next time,

TradingLab