Nasdaq Trades Near Record High as Alphabet Results Boost Optimism for Tech Stocks

Also, 10-year T-note, gold, crude oil, and euro futures

1. Nasdaq 100 E-mini futures (/NQ): +0.32% 
2. 10-year T-bond futures (/ZN): -0.23% 
3. Gold futures (/GC): -0.62% 
4. Crude oil futures (/CL): +1.43% 
5. Euro futures (/6E): -0.09% 
   

Nasdaq futures (/NQ) led equity markets higher this morning as small-caps and blue-chip stocks fell. Alphabet (GOOGL) results kicked off the season for the Magnificent Seven group, overshadowing results from other sectors of the market that didn’t impress as much. Investors are concerned about President Trump’s upcoming visit to the Federal Reserve, which marks the first time in almost 20 years that a president will visit the central bank. However, positive news on trade deals is helping to prop up sentiment, with the Financial Times reporting that a deal with the European Union is moving forward.  

A positive earnings report from Alphabet (GOOGL) helped guide markets higher this morning. Nasdaq 100 futures (/NQU5) rose about 0.22% in early trading. However, big drops for International Business Machines (IBM) and Tesla (TSLA) held bulls back to a degree, with those stocks dropping 9% and 8%, respectively. UnitedHealth Group (UNH) found itself in more potential trouble after the company revealed it’s being investigated by the Department of Justice over its Medicare billing. Dow (DOW) fell over 14% after posting poor results for its second quarter. American Airlines (AAL) fell over 8% after posting guidance that disappointed.  

A rosy labor market report that showing layoffs remain low pushed Treasuries lower Thursday morning. Jobless claims were at 217,000 for the latest week, a drop of 4,000 from the previous week. The data isn’t helpful for rate cut bets, which pushed yields higher for a second day. 10-year T-note futures (/ZNU5) fell 0.17% in early trading. A 20-year bond auction was met yesterday with strong demand. However, traders seem focused on the economic tone in the US economy.  

A little bit of dollar strength and higher yields dented the appeal for precious metals. Gold futures (/GCQ5) fell 0.62% this morning, extending declines from the previous session. The trade deal made recently with Japan has also boosted hopes that other agreements are close, which has increased market sentiment. While tariffs remain a risk to the market, those fears have cooled for now and without a return to worry, we may not see significant support for gold.  

Crude oil prices (/CLU5) rose 1.4% this morning, as optimism over a trade deal with the European Union grew. The Energy Information Administration (EIA) said commercial crude inventories dropped by 3.2 million barrels from the previous week in its weekly report released yesterday. Distillate inventories rose nearly 3 million barrels, but total inventory remains 19% below the five-year average. The drop in NY Harbor ULSD futures (/HOQ5) drove the 3-2-1 crack spread down by over 5%, signaling some weakness in refinery margins.  

Euro futures traded cautiously this morning as optimism over a US-EU trade deal grows. While a trade deal would be beneficial for the European economy, it would likely inspire more confidence in the US, given the concerns over its status as a global reserve currency player. The euro has already put in several sessions of gains, which may be enticing some traders to take profits as prices approach the early July swing high. The European Central Bank (ECB) held rates steady today and cited exceptional uncertainty over its macro view.  

Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater

Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx

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