Major US indexes tumble, snapping 5-day streak of gains.

Drops in technology and consumer-oriented firms helped pull stocks lower on Wall Street yesterday, dragging the major indexes below their previous record highs. The USA500 index fell 0.75% to 4,382.82, USA30 fell 0.49% to 34,847.42, and the tech-heavy USA100 lost 1.5% to 14,882.17.

Price moves look choppy as investors try to get a clearer picture of how strong the economic recovery from the pandemic is and when and how the Fed will reduce its support for the economy. Investors are also monitoring China’s regulatory ban on companies. Chinese stocks fell again Tuesday after Beijing announced enforcement measures on technology and real estate and was reportedly considering curbs on for-profit education ventures. Authorities say they need to protect public security and financial stability, contain soaring housing costs and promote social welfare.

Sales were most prominent in technology and communications stocks, as well as companies that rely on consumer spending. Traders turned to sectors deemed less risky, including utilities, health care and companies that make household and personal goods, as well as bond purchases, which sent the yield on the 10-year Treasury note down to 1.25% from 1.29% late Tuesday. Long-term yields have eased from their sharp gains earlier in the year.

US companies’ quarterly earnings reports this month received heavy capital gains.

  • Microsoft  reported revenue marking $46.2 billion, exceeding analyst estimates, and an increase of 21% over the comparable period last year. The company’s net income rose 47% year-on-year to $16.5 billion, while diluted earnings per share jumped 49% to $2.17.
  • Alphabet Inc. reported its revenue jumped 62% on an annual basis to reach $61.88 billion in the second quarter of the year, exceeding analyst expectations. Parent company Google’s operating income was up 31% year-on-year to $19.4 billion, while net income was up 166% to $18.5 billion, or $27.26 per diluted share. Per segment, Google Search & other revenue rose 68.1 % to $35.8 billion, while Google Cloud jumped 53.9% to $4.6 billion. Alphabet shares jumped more than 4% in after-hours trading, following the announcement.
  • Apple reported revenue of $81.4 billion, up 36% year-on-year and topped forecasts. Earnings per share (EPS) was also above expectations at $1.30 and iPhone sales jumped 50% to $39.6 billion. Apple shares were up 0.67% in after-hours trading.
  • Visa reported revenue of $6.1 billion, up 27% over the same period a year earlier and exceeding analyst estimates. GAAP net income rose 9% year-on-year to $2.6 billion, while GAAP earnings per share (EPS) increased 10% to $1.18. Adjusted net income jumped 39% to $3.3 billion, or $1.49 per share. Visa shares fell 1.17% in after-hours trading despite better-than-expected results.
  • Mondelez Internationalrevealed its second-quarter earnings results on Tuesday, marking a 12.4% year-on-year increase in revenue to $6.6 billion. Diluted earnings per share reached $0.76, which was 100% higher than the comparable period last year and exceeded market expectations. Gross profit increased by $300 million or 20 basis points to achieve 39.6% growth. Mondelez also shared that in the first half of 2021 it returned a total of $2.4 billion in capital to shareholders and increased its quarterly dividend to 11%. Following the report, Mondelez shares fell 1.96% in after-hours trading to sell for $63.95 per share.
  • Starbucks Corporation reported diluted earnings per share of $0.97, compared with a registered $0.58 loss for the same period a year earlier. Consolidated net revenue totaled $7.5 billion in the third trimester, jumping 77.6% year-on-year to the top estimate. The company’s global comparable store sales jumped 73% as comparable store sales in the US skyrocketed 84% annually. The Oregon-based company’s operating income jumped 74%, reaching $216 million in the quarter ended June. Starbucks shares fell more than 2.5% in after-hours trading following the announcement.

Today there are reports scheduled for Facebook, PayPal, Pfizer, Qualcomm, Thermo Fisher Scientific, CME Group, Boeing and a number of other companies.

Click here to access our Economic Calendar

Ady Phangestu

Analyst – HF Educational offfice – Indonesia

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