Good Morning,
Happy Monday! It's hard to believe we're starting the last week of July, but here we are.
Markets opened sharply higher this morning after the U.S. and Iran agreed to pause hostilities over the weekend. The key question, of course, is how long that will last. For now, oil prices are lower, yields are down, and stocks are moving higher.
The technology sector came under pressure last week as investors began pushing back on some of the massive spending commitments being made toward AI infrastructure. I believe part of this move was momentum-driven following the spike in oil prices, but it will be interesting to see how investors react to earnings reports from several major companies this week. Notable releases include Microsoft and Meta after the close on Wednesday, followed by Apple and Amazon on Thursday.
We will also receive the Federal Reserve's latest interest rate decision on Wednesday, followed by Chair Warsh's press conference. While expectations for a rate hike at this meeting have increased, I continue to anticipate that the Fed will hold rates steady, with a hike potentially coming in September.
All things considered, earnings results have largely exceeded expectations thus far. Fundamentally, I believe the HALO narrative remains intact: Heavy Asset, Low Obsolescence. In essence, companies that own significant physical assets with a low likelihood of being displaced by AI should continue to perform well.
As always, please don't hesitate to reach out with any questions or comments.
Attached is this week's Market Strategy Radar Screen Report from John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management.
Have a great week!