Markets Mixed as AI Profit-Taking Offsets Health Care Strength

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Coming off two days of strong gains, world markets have been somewhat mixed overnight as investors digest economic and earnings reports. Health Care earnings have been received positively, while AI-related results and commentary have sparked some profit-taking.

US ADP private-sector payroll growth slowed more than expected in July (44K v. Street 70K and previous 98K). Overseas Services PMI reports were mixed, with Australia, Spain, and the UK beating expectations, while Japan and France were worse than expected.

NASDAQ futures are up 0.2%, while Dow futures are up 0.5%. Overseas, the Nikkei gained 3.6% and the Hang Seng rose 0.2%. In Europe, the DAX is up 0.1% and the FTSE has advanced 0.3%.

SpaceX shares are down 11.2% in premarket trading after the company announced in its first earnings report that revenues increased 92% from last year. However, the company posted a loss as capital spending rose about sixfold from a year ago due to increased AI spending. Chipmaker Advanced Micro Devices is down 8.7% premarket, despite posting better-than-expected earnings, as traders take profits against the news. Eli Lilly* is up 5.2% and CVS Health* has gained 2.5% after both Health Care companies beat the Street on sales and earnings and increased guidance.

Conflicting signals from the Middle East have Crude Oil starting to climb again. The conflict has spread to the Red Sea, where an attack on a Saudi tanker occurred within hours of the US indicating it may be close to a deal. Crude Oil is up 0.1%, trading near $75.00/bbl, while Brent Crude has gained 0.6%, trading near $80.00/bbl. Gasoline is down 0.1%, trading near $2.85/gallon. Gold has jumped 2.8%, trading near $4,2,50/oz, Copper is up 0.5%, trading near $6.65/lb, and Silver has climbed 3.9%.

The US 10-year Treasury note yield has slipped back toward 4.60%, while the US 30-year Treasury note yield has retreated toward 5.15%. The USD is down slightly today, suggesting investors may be taking the recent drop in energy prices and the soft ADP report as easing pressure on the Fed to raise interest rates. The Euro is up 0.2%, while the Loonie has gained 0.1%.

US ISM Services PMI (Street 54.5) is due at 10:00 a.m. EDT. US Nonfarm Payrolls, Canadian employment, and China trade data are all due Friday morning. MetLife and Nutrien report results after today’s close, followed by ConocoPhillips, BCE, Restaurant Brands, and Molson Coors on Thursday morning.

*Shares of Eli Lilly and CVS Health are held in some portfolios managed by SIA Wealth Management.

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