Market Monitor News July 24 BMO (Lamb Weston, Cal-Maine Foods UP - Texas Instruments DOWN)

There’s a fine line between global cooperation and good old-fashioned trade drama. On Wednesday, Wall Street danced right on that line, lifted by fresh trade agreements, only to stumble slightly when chip stocks crashed the party.

Relief Rally: Trade Diplomacy Sparks a Market Lift

Wall Street cheered a rare moment of geopolitical sanity. The U.S. and Japan sealed a long-awaited trade deal, which includes a 15% import tariff on Japanese goods.

While that might not sound very “friendly,” it’s at least predictable and predictability is music to investors’ ears. The Dow Jones jumped 1.1%, the S&P 500 rose 0.8% to notch another record high, and even the Nasdaq managed a 0.6% lift, despite headwinds from its usual suspects in semiconductors.

Adding more fuel to the rally, Brussels leaked that the U.S. and EU are this close to a similar trade deal. Analysts expect a standard 15% tariff structure, which may finally give investors a roadmap through the fog of tariff threats and global posturing.

The bigger story? These trade deals signal a shift toward de-escalation, or at the very least, organized confrontation. And for the markets, that’s good enough to rally on.

Texas Instruments Shocks with Honesty

While macro news brought smiles, microchips brought frowns.

Texas Instruments (TXN | -13.34%) delivered a sobering outlook for Q3, projecting revenue between $4.45B and $4.8B, technically within the range of expectations, but nowhere near bullish.

Analysts had hoped for momentum after last quarter's surprise surge. Instead, CFO Rafael Lizardi told it like it is: “We have 100,000 customers. We don’t know” if previous growth was demand pull-forward due to tariff fears.

Investors were not impressed. TXN plunged more than 13%, dragging much of the chip sector with it, except for Nvidia, which held its ground.

Fries and Eggs: The Surprisingly Juicy Earnings Winners

While tech stumbled, frozen fries soared. Lamb Weston (LW | +16.31%) led the S&P 500 thanks to a strong Q4 and a bold cost-cutting announcement.

The company will slash 4% of its workforce to save $250 million annually by 2028. Volume growth of 8% crushed the expected 1.9%, while EPS landed at $0.87 on $1.68B revenue, both ahead of consensus.

Egg producer Cal-Maine Foods (CALM | +13.8%) also basked in glory after reporting a monster profit surge. Driven by a 55% spike in egg prices (thanks, bird flu), its Q4 numbers cracked expectations wide open.

AT&T lifting guidance

AT&T (T | +1.2%) showed steady growth in both mobile and fiber subscribers and even lifted its guidance, proof that - sometimes - boring works.

Alphabet Nails It, AI Is Paying Off

Alphabet (GOOGL | -0.58% regular session, +1.82% after hours) made up for its modest daytime drop with a strong post-market performance after crushing its Q2 numbers. Revenue hit $96.4B (vs. $94B expected), with EPS landing at $2.31, beating the $2.18 forecast.

Google’s ad revenue surged to $71.3B (+10%), Cloud rose to $13.6B (+14%).

The company plans to invest a whopping $85B this year, $10B more than previously expected, with $40B already spent in H1. CEO Sundar Pichai goes all-in on AI...

Tesla: From Robo-Taxis to Humanoid Robots... but Sales Lag

Tesla’s (TSLA | +0.14% regular session, -4.44% after hours) Q2 earnings were a mixed bag.

Revenue came in at $22.5B, down 12% year-over-year, and EPS missed estimates at $0.33 ($0.40 adjusted). Automotive revenue fell 16%, energy dipped 7%, and net income dropped to $1.2B.

The company is betting big on the future, launching robo-taxis in Austin and aiming to roll out humanoid robots by 2026. But that’s tomorrow’s story. Today, falling deliveries (-13.5%) and margin compression are worrying signs.

Real Estate and Rates: Mixed Signals

June’s existing home sales dropped 2.7% to 3.93M units, despite a modest 2% annual rise in the median home price ($435,300). Mortgage applications ticked up 0.8%, but let’s be honest, we’re still miles from a housing boom.

As oil prices remained flat around $65.25, all eyes turn to the Fed. Rate cut pressure from the White House continues, but for now, Jerome Powell isn’t budging. I wouldn’t bet against more political noise on that front.

What I’m Watching Today

We’ve got a packed macro calendar ahead:

• Chicago Fed National Activity Index

• July PMI (composite)

• New home sales data

Final Thought

Markets love clarity, even if it comes with a 15% tariff.

Between headline-grabbing trade pacts and strong earnings from unexpected corners of the market, investors have enough reasons to stay cautiously optimistic. But don't let the rally lull you, Tech fatigue is real. Volatility remains one tweet away.

Stay nimble, stay skeptical and I’ll see you back here tomorrow.

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Kristoff - ChartMill

Next to read: Market Monitor Trends & Breadth Analysis, July 24