My Top 10 Things to Watch for Thursday, July 31st
1. Microsoft
Reporting impressive growth in its business, particularly its AI-powered digital assistant Copilot and Azure cloud division, it joins the $4 trillion club. This was a remarkable quarter, much better than six months ago. In reality, it was limited by a lack of computing power. Following last night's earnings report, shares of Meta Platforms rose 8% this morning.
2. Meta Platforms
The social media giant reported surprisingly good quarterly results and strong guidance last night, sending its stock up nearly 12% this morning. Its investments in AI appear to be paying off, both in innovation and advertising. Users of its suite of apps, including Facebook, Instagram, WhatsApp, and Messenger, have grown to nearly 3.5 billion. Smartglasses' form factor will be a winning formula for AI.
3. Strong earnings-driven tech stocks this morning set the stage for a strong start to the S&P 500 and Nasdaq. Apple and Amazon report earnings tonight. Apple has a long way to go to regain Wall Street's favor, while Amazon will also need a strong performance. Updates on artificial intelligence and tariffs will be topics of note during both conference calls.
4. Federal Reserve Chairman Jerome Powell opted yesterday afternoon to await further evidence on the impact of President Donald Trump's evolving trade policies on inflation. Market expectations for a September rate cut declined after the Fed held rates steady despite the president's calls for a cut. The Fed's most closely watched inflation indicator rose slightly above expectations this morning.
5. Treasury Secretary Scott Bessant stated that Washington is "working on a deal" with China ahead of Trump's self-imposed "reciprocal" tariffs tomorrow. Trump announced a trade deal with South Korea last night, which includes 15% tariffs and a pledge from South Korea of $350 billion in investments in the United States. Other trade deals include Sunday's agreement with the European Union, last Thursday's agreement with Japan, and the May 8th agreement with the United Kingdom.
6. Club stock Bristol-Myers Squibb (BMS) rose 1% this morning, but earlier gains are fading. The pharmaceutical company reported revenue and profit that beat expectations for the quarter and raised its full-year sales forecast. Investors are still awaiting results from trials of its schizophrenia drug Cobenfy as a treatment for Alzheimer's disease.
7. Eli Lilly and Company
Shares fell nearly 2% this morning following results from a trial comparing the heart health benefits of its GLP-1 diabetes drug, Mounjaro, with its own earlier-stage GLP-1 drug, Trulicity. Although the club claimed the data showed Mounjaro's superiority, the market reaction suggested the results were suboptimal. I don't believe the negative press. This is about insurance coverage.
8. Shares of biopharmaceutical company Moderna came under pressure this morning after the company announced plans to cut 10% of its global workforce. The company became a household name during the pandemic, but demand for its COVID-19 vaccine has waned. CEO Stephane Bancel wrote in a memo to employees that "Moderna has a bright future," with three approved products and more on the horizon. Moderna will report earnings tomorrow morning.
9. Design software developer Figma priced its initial public offering (IPO) last night at $33 per share, above the expected range. The stock will begin trading today on the New York Stock Exchange under the ticker symbol "FIG." Figma was originally slated to be acquired by Photoshop giant Adobe, but the deal collapsed in 2023 due to regulatory pressure. Goldman Sachs is one of the underwriters for the IPO.
10. CoreWeave's stock price rose more than 12%. The company leases access to Nvidia GPUs to cloud service providers and AI developers. CoreWeave's stock price rose after Citi upgraded its rating on the company to "buy" from "neutral." Analysts pointed to Microsoft's earnings report as evidence of continued strong demand for AI. Microsoft is a major CoreWeave customer, and Nvidia is a backer of CoreWeave.