Dow jumps 500 points as Boeing, Coca-Cola gain

Today’s headlines

What’s happening: US stocks closed mixed on Tuesday ahead of major corporate earnings and the Federal Reserve’s interest rate decision.

What happened: Gains in shares of Boeing and Coca-Cola provided a boost to the Dow Jones and S&P 500 stock indices on Tuesday.

The Nasdaq 100 settled lower amid a decline in chip stocks ahead of quarterly reports from Apple and other tech firms this week.

Why it matters: Globally stock indices had declined to one-month lows earlier on Tuesday as investors shorted chipmaker shares amid ‌concerns around competition from China and returns on AI investments by companies.

Profit taking also weighed on AI stocks, following the strong rally earlier this year.

Micron Technology’s stock fell around 9% on Tuesday and is still up 160% year to date. Shares of Advanced Micro Devices (AMD) and SanDisk lost around 8% and 14%, respectively. While AMD’s stock is up more than 100% year to date, SanDisk’s share price has almost tripled since the beginning of the year.

Strong earnings reports provided a boost the 30-stock Dow Jones index. Coca-Cola’s shares jumped 5% on Tuesday after the company reported better-than-expected quarterly earnings and raised its guidance. Boeing’s stock also gained around 5% following strong quarterly sales report.

Data released on Tuesday showed the US goods trade deficit shrank to $101.5 billion in June versus a 14-month high of $105.9 billion in the previous month, as exports declined 1.8% to $204.7 billion. US wholesale inventories climbed 0.3% to $945.9 billion in June, following a 0.3% gain in May and topped market estimates of a 0.2% gain.

The Federal Reserve started its two-day policy meeting on Tuesday, with investors widely expecting policymakers to keep rates unchanged. Markets expect an interest rate hike in September.

The Dow Jones index jumped 537.24 points, or 1.03%, to close at 52,747.32 on Tuesday, while the S&P 500 rose 0.21% to 7,428.78. The Nasdaq 100 dipped 0.98% to settle at 27,763.14.

What to watch: Investors await the Federal Reserve’s interest rate decision and minutes of their meeting.

Key earnings reports from the Magnificent Seven companies, including Apple, Amazon, Microsoft and Meta, will remain in focus this week.

The markets today

The Australian dollar in focus today ahead of a basket of major economic reports

Context: The Australian dollar fell to its lowest level in two weeks versus the US dollar following the release of inflation data.

Details: Data released this morning showed that headline inflation in Australia fell to a four-month low of 3.8% in June. The figure marked a deceleration from May’s levels and came in lower than market estimates of 4.0%. Monthly consumer prices also unexpectedly declined 0.1% for the second month in a row.

Meanwhile, the trimmed mean inflation rate climbed 3.6%, below market estimates of 3.7%, while quarterly core inflation rose 0.8%.

Although inflation level remains higher than the Reserve Bank of Australia’s 2%-3% target range, investors lowered speculations on the central bank’s rate hike this year.

Investors also assessed the rise in crude oil prices after the US military said it had intercepted a surprise Iranian attack on troops across the Middle East.

Weakness in the US dollar lent some support to the AUD/USD pair this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.1% to 101.34.

The AUD/USD forex pair fell 0.4% to 0.6947 this morning, while the S&P/ASX 200 gained around 1% to 9,036.70.

What to watch: Investors will keep an eye on the escalation in tensions between the US and Iran.

Data on building permits (0530 UAE Time), export prices (0530 UAE Time) and import prices (0530 UAE Time) from Australia will be released on Thursday. Australia’s dwelling approvals, which declined 1.1% to a four-month low of 17,019 units in May, are expected to plunge by 1.5% in June. Analysts expect Australia’s export prices to rise by 0.5% in the second quarter, the same pace as in the previous quarter. Australia’s import prices, which rose by 0.1% in the first quarter, are expected to surge by 0.2% in the second quarter.

Other Markets: European indices closed higher on Tuesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.83%, 0.41%, 0.63% and 0.35%, respectively.

The news shaping the markets

Ukraine’s President Volodymyr Zelenskyy met US President Donald Trump at the White House. The news sent the USD/RUB pair lower in forex trading this morning.

India’s industrial production grew 7.3% year-over-year in June, topping market estimates of a 5.7% gain, which exerted pressure on the USD/INR forex pair.

Malaysia’s producer prices jumped 9.2% year-over-year in June, accelerating from 7.8% in the previous month. However, the USD/MYR pair fell in forex trading this morning.

Ireland’s retail sales surged 0.4% in June, matching the growth rate recorded in May, lending support to the EUR/HKD forex pair.

The American Petroleum Institute said that US crude oil inventories rose by 3.3 million barrels in the week ending July 24, compared to market estimates of a drawdown of 2.5 million barrels. However, spot price for WTI crude oil rose this morning.

What else to watch today

Italy’s Industrial Sales (1200 UAE Time), UK’s Mortgage Approvals (1230 UAE Time), Mortgage Lending (1230 UAE Time), M4 Money Supply (1230 UAE Time), Net Lending to Individuals (1230 UAE Time) and Bank of England’s Consumer Credit (1230 UAE Time), US MBA Mortgage Applications (1500 UAE Time), EIA Crude Oil Stocks Change (1830 UAE Time), EIA Gasoline Stocks Change (1830 UAE Time) and EIA Heating Oil Stocks Change (1830 UAE Time), Russia’s Unemployment Rate (2000 UAE Time), Business Confidence (2000 UAE Time), Corporate Profits (2000 UAE Time), Real Wage Growth (2000 UAE Time) and Retail Sales (2000 UAE Time) as well as Bank of Canada’s Summary of Deliberations (2130 UAE Time).