| Good morning. US stocks fail to gain traction. LVMH sales growth slows. Private equity gets creative to buy more time. Here's what's moving markets. — Isabelle Lee Stocks failed to gain traction as traders waded through earnings. The S&P 500 fell while a "Magnificent Seven" gauge of tech stocks underperformed the Russell 2000. UPS recorded its largest-ever drop on disappointing results. In late trading, Tesla slipped after an earnings miss; Alphabet whipsawed even after its revenue beat analyst estimates. Upbeat earnings would be a much-needed driver for equities after a rally in the first half of the year, but the biggest US tech firms are facing tough comparisons with stellar earnings cycles over the past year. The market is facing pressure heading into a seasonally weak period, with volatility likely to be heightened by the US presidential election campaign. US two-year yields edged lower after a solid $69 billion auction, which reinforced market bets on rate cuts. Private equity firms are using a form of financial engineering to buy more time for wringing returns from their under-achieving investments. Their biggest clients are saying "no thanks." Ares Management weighed the idea, known as a continuation fund, but investors snubbed it. New Enterprise Associates had to scale back a similar plan after talking to clients. By one gauge, only a third of the proposed funds have been getting done. Continuation funds are among a growing array of asset-shuffling tactics that private equity funds are adopting because the normal way of producing payouts — selling assets — has been crimped by a feeble deal market. In this case, managers slide hard-to-sell assets from an older fund into a new one, akin to shifting an investment from one pocket to another. LVMH sales growth slowed last quarter as wealthy shoppers reined in spending on pricey Louis Vuitton handbags and Christian Dior couture. Organic revenue at the luxury group's fashion and leather goods unit — its biggest division — rose 1%, half the gain expected by analysts. That compares with 21% growth a year earlier at the unit, which houses brands such as Celine, Fendi and Loewe. LVMH Moët Hennessy Louis Vuitton SE saw sales in the region that includes China tumble 14% in the quarter, a disappointment for a luxury group that's been among the most resilient in the face of cooling demand for high-end goods. The slump was partially offset by strong spending by Chinese travelers overseas, especially in Japan. Sales there jumped 57%, helped by the weak yen. While only about 30% of Bank of Japan watchers say authorities will hike interest rates when they gather next week, more than 90% see the risk of such a move, according to a Bloomberg survey. Some 14 of 48 economists predict Governor Kazuo Ueda's board will raise its policy rate from the current range of 0 to 0.1% at the July 31 conclusion of next week's meeting, according to the poll. Another 27% said the rate move is likely to come in September, up from 19% in a previous survey, and 35% said the hike will come in October. Since the previous policy meeting on June 14, economic data have been more or less mixed. Inflation expectations have stayed elevated while consumer spending hasn't shown signs of a robust recovery. The yen hit a fresh 38-year low earlier this month. On Wednesday the Central Bank of Sri Lanka will issue its rate decision, and it will likely cut the standing deposit and lending rates by 50 basis points to 8.00% and 9.00%, respectively. Elsewhere, the Bank of Canada will also decide on rates. The US gets data on new home sales and S&P Global PMI, as well as IBM earnings. Here's what caught our eye over the past 24 hours: - Harris in first rally vows to put her record against Trump's
- Secret Service director resigns after anger following Trump shooting
- Roblox is struggling to keep pedophiles off its platform
- American steel CEOs urge US to go further in Mexico trade moves
- Ukraine envoy visits China for first time since Russian invasion
- Ruined pregnancies, IVF mishaps threaten $40 billion industry
- Zuckerberg aims to rival OpenAI, Google with new model
- Ether ETFs trade over $1 billion in strong crypto fund debut
Magnificent Seven earnings are off to an uninspiring start, which may help further justify the recent great rotation in stocks. Tesla shares were down after-hours as the company missed profit estimates for a fourth consecutive quarter. The awaited Robotaxi rollout has been delayed until October from August, pushing the shares even lower during the analyst call. Although Tesla lagged its Magnificent Seven peers in recent quarters, CEO Elon Musk's AI promises helped turn the stock around in the run-up to the earnings. Meanwhile, Alphabet's EPS growth came in slightly better than expected — the smallest beat since early 2023, per Bloomberg data. So while tech megacaps continue to deliver, their profit growth appears to have peaked. That may give way to further rotation into other corners of the market. Tatiana Darie writes for Bloomberg's Markets Live blog in New York. Follow her on X at @tatianadariee. | 
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