Breakfast | US stocks rise across the board, with large-cap technology stocks being the most crowded trades
The Dow Jones Industrial Average rose for seven consecutive days. Following Apple's and NVIDIA's record-high closing prices on Monday, NVIDIA and Microsoft reached new all-time highs on Tuesday. Tesla has been rising for six days straight, and Netflix reached its highest level in 18 months. Meta Platforms released the latest generation of its open-source large model, Llama 2, in collaboration with Microsoft and Qualcomm. Microsoft announced the pricing for Office 365 Copilot. Amazon and Apple faced antitrust fines in Spain. Chinese investors reduced their holdings of US stocks in May, setting a new record.
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Market Overview
US stock index futures open lower, Nasdaq futures down 0.18%
Despite lower-than-expected growth in US retail sales in June, overall positive earnings reports from major financial institutions such as Bank of America and Morgan Stanley boosted US stocks, which opened lower but then rose. The Dow Jones has risen for seven consecutive days, marking the longest winning streak since March 2021, while small-cap stocks in the Russell 2000 index outperformed with a gain of over 1% for the day. The Nasdaq rose 0.76%.
Most of the star tech stocks rose. Meta increased by 0.5%, Amazon fell by 0.6%, Google Class A shares fell by 0.7%, and Apple fell by 0.1%, moving away from its all-time high. Tesla rose by over 1% for the sixth consecutive day. Netflix rose by 5.5% to a 18-month high, and Microsoft rose by 4% to a historical high, driving up AI concept stocks.
Most popular Chinese stocks fell. JD.com fell by 4.6%, Baidu fell by 3.6%, Pinduoduo fell by 4.3%. Alibaba fell by over 2%, Tencent ADR fell by 4%, Bilibili fell by 6.5%, NIO fell by over 1%, Xpeng Motors turned up by nearly 2%, and Li Auto fell by nearly 3%.
Top Stocks
Compared to Llama 1 released in February this year, the number of tokens used for training has doubled to 20 trillion, and the most important context length limit for using large models has also doubled in Llama 2. Llama 2 includes models with 7 billion, 13 billion, and 70 billion parameters. Meta believes that Llama 2 will be able to run on Qualcomm chips, breaking the monopoly of NVIDIA and AMD processors in the AI industry.
Microsoft announces pricing for Office 365 Copilot
Office 365 Copilot will charge enterprise users $30 per month. This news has stimulated an increase in Microsoft's stock price, reaching a new all-time high with a market value of $2.67 trillion. In addition, Microsoft's Bing Chat will launch an enterprise version and will be released as an independent product in the future, priced at $5 per person per month.
Amazon and Apple fined by SpainThe Spanish antitrust regulator has fined Amazon and Apple 194 million euros for colluding to restrict the free sale of Apple and competitor devices on the Amazon Spain website.
Several listed companies announce their performance
Novartis' net sales in the second quarter were $13.622 billion, a YoY increase of 7%; core net profit was $3.811 billion, an increase of 11%. The company plans to repurchase up to $15 billion in shares by the end of 2025 and intends to spin off its Sandoz generics division for listing on the Swiss Stock Exchange.
Bank of America's second-quarter revenue was $25.2 billion, an 11% YoY increase; net profit was $7.4 billion, a 19% increase; earnings per share were $0.88, a 21% increase.
Morgan Stanley's second-quarter net profit was $2.182 billion, net revenue was $13.46 billion, and earnings per share were $1.24; wealth management revenue was $6.66 billion, and net interest income was $2.01 billion.
Temu sues Shein in the U.S. for monopoly and bullying of suppliers
Temu accuses Shein of forcing more than 8,000 clothing manufacturers to sign exclusive distribution agreements and prohibiting them from supplying Temu. Violators will be fined. Previously, Shein sued Temu for trademark and copyright infringement and collaborated with a KOL to falsely promote the Shein brand on social media.
Macro and Strategy
U.S. retail sales increase for the third consecutive month in June
U.S. retail sales in June increased by 0.2% MoM, marking the third consecutive month of growth, but lower than the expected 0.5%. The previous value was revised upward from 0.3% to 0.5%; core retail sales increased by 0.2% MoM, lower than the expected 0.3%. The previous value was revised upward from 0.1% to 0.3%.
Probability of a 25 basis point rate hike by the Fed in July is close to 100%
According to CME's "FedWatch," the probability of the Fed maintaining interest rates at 5.00%-5.25% in July is 0.8%, while the probability of a 25 basis point rate hike to the 5.25%-5.50% range is 99.2%.
Chinese investors' selling of U.S. stocks in May reaches a record high
According to the latest data from the U.S. Treasury Department, Chinese investors sold a record $2.9 billion worth of U.S. stocks in May, following a $1.85 billion sell-off in April.
[Nasdaq's "special rebalancing" is approaching! Microsoft and NVIDIA expected to have the largest downward adjustment, Broadcom and Adobe may be the biggest winners](https://longportapp.cn/en/news/92932026?force=1&app_id=longbridge)
The total weight of the "Seven Giants" in the technology sector may decrease from 55.1% to 43.7%.
"Bad News" for US Tech Stocks: Large Funds Hitting Upper Limits
BlackRock's tech opportunity fund is prohibited from further increasing its holdings in Apple, Microsoft, and NVIDIA. JPMorgan's large-cap growth fund holds stocks of Microsoft, Apple, NVIDIA, Alphabet, and Amazon that exceed the upper limits.
Bank of America Survey: Betting on Soft Landing, Long Tech Stocks the Most Crowded Trade
Long tech stocks are the most crowded trade, followed by long positions in Japanese stocks.
We hope that the US side will fulfill President Biden's commitment to not decouple from China, not hinder China's economic development, and not contain China, in order to create a favorable environment for China-US economic and trade cooperation.
The association stated that the White House has repeatedly adopted overly broad, vague, and sometimes unilateral restrictive measures, which may weaken the competitiveness of the US semiconductor industry, disrupt the supply chain, and cause significant market uncertainty.