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Stocks hit on tech earnings while Brent reclaims USD 100/bbl - Newsquawk US Market Wrap

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Thursday, Jul 23, 2026 - 07:49 PM
  • SNAPSHOT: Equities down, Treasuries down, Crude up, Dollar up, Gold down
  • REAR VIEW: Yemen's Houthis targeted two Saudi oil tankers in Red Sea; US CENTCOM says completed the 12th consecutive night of strikes against Iran; GOOGL capex raise and concern on short term margins outweighs earnings beat; US initial claims fall to multi-decade lows; Weak US 10yr TIPS auction; ECB hold rates as expected; TSLA hit on profit miss; Aussie jobs report beats
  • COMING UP: Data: Global PMIs Flash (Jul), Japanese Inflation (Jun), German GfK Consumer Confidence (Aug), UK Retail Sales (Jun), Canadian PPI (Jun). Events: BoE DMP (Jul). Speakers: ECB's Lane. Supply: Australia. Credit Ratings: Scope Ratings on Norway.

More Newsquawk in 2 steps:

MARKET WRAP

It was a risk-off session on Thursday, with tech stocks leading the downside following a flurry of earnings, as both Alphabet (GOOGL) and Tesla (TSLA) posted extensive losses. Alphabet was weighed on after it raised its CapEx plans, reigniting concerns around elevated spending among the tech giants, alongside negative free cash flow and further margin pressures. The higher CapEx outlook, however, supported memory names, which stand to benefit from increased tech spending. Meanwhile, Tesla (TSLA) was hit after a profit miss.

Adding to the risk-off sentiment was the sharp rally in crude prices amid further geopolitical escalation. The Houthis attacked Saudi Arabian tankers in the Red Sea, while the US struck Iran using B-1 bombers for the first time since the resumption of hostilities. Meanwhile, Iran is reportedly refusing to budge on its current proposal for a 10-day ceasefire, while further explosions were heard in Kuwait and Jordan this evening, reportedly linked to Iranian missiles. The escalations saw Brent crude reclaim USD 100/bbl, peaking around USD 102/bbl.

The rise in crude prices prompted a further bear flattening of the Treasury curve as higher energy prices fuelled inflation concerns and bolstered expectations for further Fed tightening. Meanwhile, weekly jobless claims reinforced the picture of a resilient labour market, with initial claims falling to a multi-decade low.

The combination saw traders add to Fed rate hike bets, with around 38bps of tightening now priced by year-end, fully pricing one 25bp hike and assigning roughly a 52% probability of a second. Attention now turns to next week's FOMC meeting, where a hold remains the base case, although markets have increasingly priced the risk of an immediate hike, currently at around 40%.

In FX, the Dollar gained as it tracked Treasury yields higher, while weakness in equities also supported haven demand. The Canadian Dollar led the gains among its peers on the back of higher crude prices. The antipodeans generally lagged amid the risk-off environment, although NZD notably underperformed AUD. The Yen weakened further, although USD/JPY briefly saw a sharp move lower without an obvious catalyst before quickly paring the move.

US

JOBLESS CLAIMS: Initial jobless claims fell sharply to 187k in the week ending July 18th (exp. 212k, prev. 209k revised from 208k), while the four-week moving average declined to 207.5k from 214.75k, pointing to continued strength in the labour market. Continuing claims (w/e July 11th) edged lower to 1.796mln from the prior week's revised 1.798mln (prev. 1.805mln), while the insured unemployment rate was unchanged at 1.2%. In the unadjusted numbers, initial claims totalled 192,296, falling by 53,718 (-21.8%) W/W, a considerably larger decline than the 31,379 (-12.8%) decrease expected by seasonal factors. Looking at the advance state breakdown (NSA), the largest declines were seen in New York (-16,954), Michigan (-4,977), California (-3,932), Texas (-2,453), and Pennsylvania (-2,350), while only a handful of states recorded increases, led by Louisiana (+204), Delaware (+168), Vermont (+50), and Alaska (+12).

FIXED INCOME

T-NOTE FUTURES (U6) SETTLED 10+ TICKS LOWER AT 108-03

Treasury yields advanced on Thursday as oil prices continued to climb while jobless claims fell to a multi-decade low. At settlement, 2-year +5.6bps at 4.360%, 3-year +5.4bps at 4.395%, 5-year +5.0bps at 4.457%, 7-year +5.0bps at 4.576%, 10-year +4.0bps at 4.699%, 20-year +3.2bps at 5.204%, 30-year +2.0bps at 5.169%.

THE DAY: Treasuries sold off across the curve on Thursday, led by the front end, as oil prices continued to climb amid escalating geopolitical tensions, lifting inflation expectations.

The US-Iran conflict continued to escalate overnight, with fears growing that military operations could intensify further. CENTCOM announced it had completed a 12th consecutive night of strikes against Iran, targeting Iranian military assets including maritime capabilities, missile and drone storage facilities, surveillance sites and air defence assets. Reports also suggested the US used B-1 bombers for the first time since hostilities resumed. Meanwhile, reports throughout Thursday suggested President Trump is close to deciding whether to expand the campaign into something "bigger than ever before" and more aggressive than Operation Epic Fury, although no final decision has been made. Reports also continued to suggest Israel is prepared to join the operation if required, although only in response to an Iranian attack. Meanwhile, Trump announced he will hold Houthi's responsible for attacking two Saudi Arabian ships in the Red Sea last night - potentially widening the conflict in the Middle East if more ships are struck.

US data also leaned hawkish, with initial jobless claims falling sharply to just 187k, the lowest level since 1969. Oxford Economics cautioned that the unusually large decline may have been influenced by seasonal factors, but said the exceptionally low level of claims nevertheless highlights subdued layoffs and continued underlying labour-market strength. Elsewhere, the ECB decision was largely as expected, although Bloomberg subsequently reported that officials are prepared to raise rates in September.

Overall, the continued rise in crude prices is adding to inflation concerns, while the sharp decline in jobless claims reinforces signs of a resilient labour market. Together, the developments strengthened the case for Fed tightening, with around 10bps now priced for next week's meeting, implying roughly a 40% probability of a 25bp hike. Meanwhile, around 38bps of tightening is priced by year-end, fully pricing one hike and assigning roughly a 52% probability of a second.

SUPPLY

Notes

Bills

  • US to sell USD 92bln 13-week bills and USD 79bln 26-week bills on July 27; to sell USD 95bln 6-week bills on July 28; all to settle on July 30
  • US sold 4-wk bills at high-rate 3.730%, B/C 2.79x; sold 8-wk bills at high-rate 3.795%, B/C 2.31x

STIRS / OPERATIONS

  • Fed Pricing: 38bps (prev. Dec 35.6bps)
  • EFFR at 3.63% (prev. 3.63%), volumes at USD 102bln (prev. USD 106bln) on July 22nd
  • SOFR at 3.62% (prev. 3.61%), volumes at USD 3.026tln (prev. USD 2.975tln) on July 22nd
  • NY Fed RRP op demand at 0.90bln (prev. 0.38bln) across 6 counterparties (prev. 2) on July 23rd

CRUDE

WTI (U6) SETTLED USD 5.36 HIGHER AT 92.19/BBL; BRENT (U6) SETTLED USD 6.62 HIGHER AT 100.69/BBL

The crude complex further extended on its week rally as US/Iran relations shown no sign of improving, or attacks de-escalating. Overnight, US and Iran exchanged strikes for a 12th consecutive night while Yemeni Houthis threatened further supply disruptions, as they attacked oil tankers in the Red Sea. Trump later annnounced he will hold Iran and the Houthis themselves will be responsible if they attack ships again. Continuing to add to the picture, US President Trump said today he is "considering a massive attack greater than anything before, I'm close to making a decision", noting "Israel will join in within 2 minutes if I ask". Within the interview, the President didn't give a timeline for his decision but added they [Iran] haven't received enough pain yet. As such, Brent breached USD 100/bbl for the first time since May, to hit a peak of USD 102.00/bbl, while WTI topped out at USD 93.50/bbl. Ahead, there is a lack of US data on Friday before a big week of risk events next week, headline by the latest FOMC confab and ongoing geopolitcal developments.

EQUITIES

CLOSES: SPX -1.21% at 7,408, NDX -1.87% at 28,455, DJI -0.97% at 51,717, RUT -0.67% at 2,940

SECTORS: Communication Services -5.20%, Consumer Discretionary -5.12%, Consumer Staples -1.14%, Technology -1.12%, Materials -0.99%, Financials -0.34%, Real Estate -0.07%, Utilities +0.52%, Energy +0.56%, Health +1.29%, Industrials +1.77%.

EUROPEAN CLOSES: Euro Stoxx 50 -1.63% at 6,214, Dax 40 -1.77% at 24,709, FTSE 100 -0.73% at 10,639, CAC 40 -1.64% at 8,299, FTSE MIB -2.80% at 51,316, IBEX 35 -1.55% at 19,267, PSI -0.27% at 9,253, SMI -0.71% at 14,215, AEX -1.28% at 1,087

STOCK SPECIFICS:

  • Alphabet (GOOGL): Sharply higher AI capex forecast overshadowed strong cloud rev.
  • Tesla (TSLA): Profit missed as discounting, weaker regulatory credit income, margin pressure, heavy AI & robotics spending outweighed record vehicle deliveries.
  • IBM (IBM): Weak results, but came after dismal Q2 prelim figures.
  • Texas Instruments (TXN): Upbeat forecast failed to meet lofty exp. after a recent strong rally, despite broad growth across industrial, data centre & autos.
  • ServiceNow (NOW): EPS, rev. & subscription rev. all topped.
  • CSX (CSX): Top & bottom line surpassed expected.
  • Southwest Airlines (LUV): Profit light w/ disappointing FY EPS guide.
  • RTX (RTX): Stellar Q. metrics & outlook.
  • Thermo Fisher (TMO): Rev., adj. EBIT & adj. EPS beat
  • Honeywell (HON): Rev. surpassed Wall St. consensus.
  • Bleecker Street Research publishes short report on Lyft (LYFT).
  • OpenAI is launching Health in ChatGPT.
  • AMD (AMD) said new server CPU has a wide lead over Arm (ARM) based chips; says new EPYC has 20% more performance than Nvidia (CPU); AMD and Cerebras (CBRS) to deliver AI inference that combines AMD Helios GPU rack with Cerebras Wafer-scale chip.

FX

Dollar strength followed the rally in US yields which saw new YTD highs in the short and belly of the curve. Oil prices' sharp rise is showing no sign of a break, with yet again, no signs of imminent deescalation. The Houthis targeted two Saudi oil tankers in the Red Sea. Regarding Trump, N12 reported that US President Trump said today he is "considering a massive attack greater than anything before, I'm close to making a decision", noting "Israel will join in within 2 minutes if I ask". Also, likely behind USD strength was the risk-off tone in response to Alphabet earnings keeping concerns elevated over capex raises, negative free cash flow, and short term margin pressure. Separately, the Fed's greater focus on the inflation mandate will have only gotten bigger following the latest initial claims data which shows even more stability than previously thought, dropping to their lowest level in almost 60 years, 187k (exp. 212k). DXY sits near highs of 101.54.

EUR tracked the stronger Buck with the ECB meeting not providing any surprises as President Lagarde likely intended. The statement was largely a reiteration from the ECB, though one that sparked a modest dovish reaction after the statement stuck to the data-dependent, meeting-by-meeting and no-commitment language, despite recent energy upside. As such, a modest unwinding of hawkish bets took place. The presser also did not spark much of a reaction, Lagarde noted the decision was unanimous, and that some members questioned whether ECB should have hiked today. Later on, Bloomberg reports, citing sources, noted that ECB officials are said to be ready to raise rates in September. Again, EUR/USD saw little move; now sits around 1.1377.

Antipodes were the worst performer on the risk-off day, further weighed by higher oil prices and weaker gold prices. The downward move came in AUD despite initial strength in response to a better-than-expected jobs report. Employment grew 76.3k in June (exp. 15k), with the u/e rate holding steady at 4.4%. The surprise beat may have contributed to the underperformance in NZD via rotation as seen in AUD/NZD rising to 1.2070 from earlier lows of 1.1935.

ZAR was amongst the worst EM's against USD following an unexpected SARB decision to keep rates unchanged, despite expectations for a 25bps hike. The vote was a 4-2 split, with the minority favouring a 25bps hike.

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