The S&P 500 ended lower on Thursday, led by the chipmaker stocks, after Iran's Supreme Leader Mojtaba Khamenei renewed his vow to avenge his father's killing.
According to LSEG I/B/E/S data, Wall Street analysts predict a 24% year-over-year jump in S&P 500 earnings as the quarterly reporting season kicks off. This profit growth is expected to be largely driven by the technology sector.
Following last month's spike in short-term borrowing costs, US equity funding markets stay strained. Near-record stock valuations and a massive tech stock rally continue to drive a high demand for leverage.
Despite the benefits of the equity collateral, financing costs have stayed high. The trend persists as primary dealers' exposure to stock financing remains near historic peaks.
Market gains are being driven by fewer stocks, and leverage is heavily concentrated in the booming tech sector. This narrow leadership leaves the market highly vulnerable to a sharp reversal if investor sentiment changes.
The number of Americans filing claims for unemployment benefits fell last week, suggesting the labor market remained stable despite a slowdown in job growth in June.
EBC Financial Group analyst says, if the benchmark index fails to close decisively above 7513.5 within the next 1–2 sessions, it is highly likely to roll over and retest the lower support bands at 7438.2 and 7388.
Asset recap
As of market close on 13 July, among EBC major products, Intuit shares led gains after investors appeared to rotate into oversold enterprise software names amid profit taking in chip stocks.
Oracle shares tumbled to a 52-week low after Apple sued OpenAI for alleged trade secret theft. S&P warned that an OpenAI default could leave Oracle with massive data-centre leases it cannot exit.
Oil prices rose after Trump announced plans to impose shipping fees in the Strait of Hormuz and reinstate a blockade of Iranian ports, raising concerns over potential disruptions to global crude supplies.
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EBC Financial Group Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Global Financial Collaboration or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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