Wall Street Breakfast: What Moved Markets

Stocks closed lower Friday to cap a volatile week that finished with losses after Fitch downgraded its U.S. credit rating below the top AAA level, which launched U.S. Treasury yields on a wild ride. The 10-year Treasury yield swung nearly 13 basis points lower to end the week at 4.06% after briefly climbing to about 4.2% earlier. Friday marked the final day of the busiest week in the second quarter earnings season, with Amazon jumping more than 8% to its highest in nearly a year following a strong beat and raise, while Apple fell nearly 5% after reporting lower revenue than the year-earlier quarter. "During the week the market shrugged off a ratings cut for US sovereign debt, so we suspect it will survive a muted outlook from Apple too. Our house view on each of the indices suggests a little more downside in the near term before another push up towards all time highs later in the year," Alex King from Cestrian Capital Research told Seeking Alpha. For the week, the Dow dropped 1.1%, the S&P 500 slipped 2.3% and the Nasdaq tumbled 2.8%. Read a preview of the major stock market events in the week ahead in Seeking Alpha's Catalyst Watch.

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Top News Shutterstock Stocks closed lower Friday to cap a volatile week that finished with losses after Fitch downgraded its U.S. credit rating below the top AAA level, which launched U.S. Treasury yields on a wild ride. The 10-year Treasury yield swung nearly 13 basis points lower to end the week at 4.06% after briefly climbing to about 4.2% earlier. Friday marked the final day of the busiest week in the second quarter earnings season, with Amazon jumping more than 8% to its highest in nearly a year following a strong beat and raise, while Apple fell nearly 5% after reporting lower revenue than the year-earlier quarter. "During the week the market shrugged off a ratings cut for US sovereign debt, so we suspect it will survive a muted outlook from Apple too. Our house view on each of the indices suggests a little more downside in the near term before another push up towards all time highs later in the year," Alex King from Cestrian Capital Research told Seeking Alpha. For the week, the Dow dropped 1.1%, the S&P 500 slipped 2.3% and the Nasdaq tumbled 2.8%. Read a preview of the major stock market events in the week ahead in Seeking Alpha's Catalyst Watch. Featured Here's how you can be a better investor with Premium Research shows that individual investors collectively underperform the stock market, because their decisions are often driven by emotions. We believe that as an investor you can do really well if you find opportunities based on 360-degree analysis - not hype. Seeking Alpha Premium's unparalleled stock coverage gives you the insights you need to stay ahead of the curve. With timely insights on stocks, ETFs, and more, you can track the investments that matter most to you. Plus, you can discover hidden gems and compelling new ideas with our exclusive stock ratings. Go Premium and experience its incredible value for yourself. Go Premium now Economy Full faith and credit A deal over the debt ceiling was reached just over two months ago, but the political dysfunction in Washington and the growing debt burden still seems to be a concern. Fitch downgraded the United States' long-term rating to AA+ from AAA, echoing a move made by S&P Global, which cut its rating for the U.S. in 2011 after a different government standoff. "The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management," according to Fitch. Treasury Secretary Janet Yellen said she "strongly" disagreed with the downgrade, calling it "arbitrary", while many others questioned the timing of the downgrade. The downgrade, along with the Treasury's move to expand its debt sales, spurred a risk-off sentiment in equities while yields pushed higher. (148 comments)       Tech Sales slowdown Apple (AAPL) shares slipped 2.1% in after-hours trading on Thursday as the tech giant saw its sales decline for the third consecutive quarter. Pressures are expected to continue into Q4, with CFO Luca Maestri forecasting a double-digit decline in iPad and Mac sales due to tough comparisons with the prior year. On the positive side, iPhone sales are expected to improve sequentially, while Services revenue reached an all-time high of $21.2B driven by more than a billion subscriptions to offerings like iCloud, Apple Music, News, TV+ and more. Reports also suggest that Apple may be gearing up to unveil its new iPhone on September 13. (182 comments)       Consumer Watch the cloud Helped by cost optimization efforts and the fastest delivery speeds it has ever recorded, Amazon (AMZN) rose 8.7% after the bell on Thursday as its Q2 revenue handily beat estimates. The e-commerce giant also set ambitious Q3 targets and related that every one of its businesses has multiple ongoing generative AI initiatives. CFO Brian Olsavsky further confirmed on an earnings call that AWS - which saw slowing sales as customers cut back on spending - is now stabilizing and cost optimizations are moderating, with Q2 trends continuing into July. Following the report, SA analyst Tradevestor said Amazon's ecosystem is enough reason to remain bullish long-term, while Bill Maurer warned against buying the stock, given potential headwinds expected later this year. (59 comments)       Energy Cuts could deepen Crude notched its sixth weekly gain (need to confirm) after Saudi Arabia extended its unilateral 1M bbl/day oil production cut by another month, and said it could be prolonged or even deepened. The move adds to other voluntary reductions by some OPEC members, while Russia will continue to reduce its crude supply into September. Separately, the U.S. government withdrew its offer to buy 6M barrels of oil to replenish the Strategic Petroleum Reserve as crude prices continue to rise, having just seen their best monthly gain in over a year. With prices expected to rise further, Investing Group Leader Avi Gilburt is expecting a "sizable rally" over the coming years, but is not convinced that all charts have bottomed. (22 comments)       Bonds Bottled-in-Bond There's an interesting story playing out in the bond market, and while the narrative may be hard to identify, it's easy to spot some themes with yields hitting fresh 2023 highs. Things began escalating after the Bank of Japan's policy tweak, but since then, Fitch downgraded America's debt and the Treasury expanded longer-term debt sales to address mounting borrowing needs. It comes as hedge funds have been shorting Treasuries en masse, prompting Bill Ackman to short the 30-year bond, although Warren Buffett remains a fan. The resilience of the labor market is another area that's being eyed by bond watchers, especially in the wake of strong readings that could force the data-dependent Fed to keep rates higher for longer. Wednesday's private sector ADP jobs report was another blowout, but the latest nonfarm payrolls data showed that fewer jobs were added in July, indicating that the persistently robust labor market may be losing some steam. (23 comments)       Weekly movement U.S. Indices Dow -1.1% to 35,066. S&P 500 -2.3% to 4,478. Nasdaq -2.9% to 13,909. Russell 2000 -1.4% to 1,955. CBOE Volatility Index +28.3% to 17.1. S&P 500 Sectors Consumer Staples -1.9%. Utilities -5.5%. Financials -0.8%. Telecom -2.9%. Healthcare -2.1%. Industrials -1.8%. Information Technology -4.1%. Materials -2.1%. Energy +1.2%. Consumer Discretionary -0.2%. Real Estate -2.9%. World Indices London -1.7% to 7,564. France -2.2% to 7,315. Germany -3.1% to 15,952. Japan -1.8% to 32,173. China +0.4% to 3,288. Hong Kong -1.9% to 19,538. India -0.7% to 65,721. Commodities and Bonds Crude Oil WTI +2.6% to $82.64/bbl. Gold -1.1% to $1,978.2/oz. Natural Gas -2.2% to 2.579. Ten-Year Bond Yield -0.2 bps to 4.042. Forex and Cryptos EUR/USD -0.05%. USD/JPY +0.42%. GBP/USD -0.78%. Bitcoin -1.2%. Litecoin -13.%. Ethereum -2.7%. XRP -12.9%. Top S&P 500 Gainers Arista Networks (ANET) +19%. Global Payments (GPN) +13%. Warner Bros. Discovery (WBD) +9%. Constellation Energy (CEG) +9%. Cognizant Technology Solutions (CTSH) +8%. Top S&P 500 Losers DXC Technology (DXC) -30%. Fortinet (FTNT) -26%. Generac Holdings (GNRC) -24%. SolarEdge Technologies (SEDG) -23%. Paycom Software (PAYC) -21%. Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section. 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