Market Monitor News July 18 BMO (Lucid Motors & PepsiCo UP - GE Aerospace DOWN)

The American consumer is back and Wall Street loves it. But before you cue the victory music, keep in mind: strong spending may be great for the economy, but it complicates the Fed’s next move.

Let’s unpack Thursday’s rally, the latest earnings sparks, and why autonomous taxis may soon be part of your daily commute.

Retail Therapy: The Surprise That Sparked a Rally

Wall Street traded higher Thursday, driven by a surprisingly strong retail sales report. The Dow Jones added 0.5%, while the Nasdaq advanced 0.75%. June retail sales rose 0.6%, well ahead of the 0.1% analysts expected, and a sharp reversal from May’s -0.9% slide.

The consumer is still spending, and that’s a double-edged sword. On the one hand, it signals a resilient economy. On the other? It throws cold water on hopes for imminent rate cuts from the Fed. Add to that strong initial jobless claims (221,000 vs. an expected 234,000), and we’re looking at an economy that refuses to slow down, at least not yet.

Also worth noting: the Philly Fed Index jumped to +15.9 in July (from -4.0 in June), its highest level since February. That’s more fuel for the "soft landing" crowd.

Company Spotlights: Netflix and PepsiCo Bring the Heat

Netflix (NFLX | +1.91%) reported Q2 earnings after the bell and slightly beat expectations. Revenue hit $11.08B (+16% YoY), with EPS at $7.19 (up from $4.88 a year earlier). Free cash flow was a juicy $2.27B—$100M above expectations.

The company also raised its full-year revenue outlook to $44.8–$45.2B and bumped its operating margin guidance slightly to 29.5%.

Sounds good? Wall Street wasn’t convinced. Shares dipped 1% in after-hours trading, likely because some guidance metrics still lagged analyst forecasts. Oh, and the much-anticipated ad revenue "doubling"? Investors seem to be taking a "we’ll believe it when we see it" stance.

PepsiCo (PEP | +7.45%) also served up a solid second-quarter report. Revenue rose 2.1%, driven primarily by strong international growth in Latin America (+6%) and Europe (+7%).

The North American food segment remains a weak spot, but the fading dollar headwinds provided a welcome tailwind for profits. The result? Investors chugged it down, shares jumped 7.5%.

Lucid’s Uber Deal: Hype or Hope?

Lucid Motors (LCID | +36.24%) made headlines with a moonshot rally after announcing a six-year deal with Uber (UBER | -0.28%) and robotics company Nuro. The trio plans to deploy 20,000 autonomous Lucid EVs into the Uber network, with Nuro providing the self-driving tech.

Now, let’s not get too carried away. These cars won’t hit the roads tomorrow, and autonomous driving still faces regulatory and technological hurdles. Still, it’s a bold bet and markets rewarded Lucid accordingly.

Chip Stocks Pulse Higher After TSMC’s Results

Chipmaker TSMC (TSM | +3.38%) boosted sentiment in the semiconductor space after posting strong quarterly results.

Nvidia (NVDA | +0.95%) and Broadcom (AVGO | +2.01%) rode the wave higher, while ASML (ASML | -1.26% ) lagged in U.S. trading but recovered overseas.

Analysts at HSBC argue the market still underestimates how much earnings growth is brewing under the surface, particularly with a weak dollar acting as a tailwind for multinationals.

Political Wildcards: Trump’s Trade Tactics Return

Brace yourself, Trump is back on the tariff warpath. Reports suggest he’s preparing to send letters to over 150 countries threatening import tariffs of 10–15%, set to kick in August 1. It’s still early, and the details are murky, but investors should keep an eye on trade-sensitive sectors.

Meanwhile, Trump’s social media antics impacted Archer Daniels Midland (ADM | -0.85%), after he publicly called for Coca-Cola (KO | +1.91%) to switch to cane sugar in U.S. production. If Coke complies, ADM - which produces high-fructose corn syrup - stands to lose market share. Coke hasn’t confirmed anything, but traders didn’t wait around to sell ADM.

Other Notables

GE Aerospace (GE | -2.22%) raised its guidance on strong demand, but the market responded with a shrug.

ManpowerGroup (MAN | +2.2%) posted flat sales and a net loss (thanks to restructuring), but investors liked the outlook.

Alcoa (AA | +2.91%) exceeded expectations with its latest earnings.

Energy, Currency, and Commodities

The WTI crude price jumped 1.8% to just under $84 a barrel, thanks to renewed Middle East tensions. Drone strikes on oil infrastructure in Iraqi Kurdistan raised concerns about supply stability.

The euro weakened to 1.1600 against the U.S. dollar, reflecting the growing divergence between U.S. resilience and European stagnation.

Final Thoughts: Don’t Bet Against the U.S. Consumer

Thursday’s action reinforces the fact that the American consumer remains the economy’s MVP. But that strength is a double bind: it keeps the economy afloat, yet it delays the Fed’s long-awaited pivot. For investors, it’s a classic “good news is bad news” scenario.

With Q2 earnings season heating up and geopolitical chess moves ramping up, it’s going to be a bumpy - but potentially profitable - ride into August.

I’ll be watching. You should too.

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Kristoff - ChartMill

Next to read: Market Monitor Trends & Breadth Analysis, July 18