The Daily Breakdown looks at the bevy of events today, including GDP, the Fed, and earnings from Microsoft and Meta.
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Wednesday’s TLDR
- Fed, GDP in focus
- MSFT, META to report earnings
- SOFI falls on latest offering
What’s Happening?
Today is one of the busiest days in US markets. Here’s the rundown:
GDP. Before the market opens, we’ll receive the second-quarter GDP print. After a bumpy first quarter, economists expect a rebound in Q2, showing annualized growth of roughly 2.5%. Remember, consumer spending drives about two-thirds of US GDP, so investors want to see a strong showing from the consumer to feel reassured about the economy.
Fed. At 2 p.m. ET, the Federal Reserve will release its interest rate decision. Markets are not pricing in a rate cut from the Fed, but investors will be focused on the language in the Fed statement and will be paying close attention to Fed Chair Powell’s Q&A session, which starts at 2:30 p.m. With markets currently pricing in a rate cut for September, investors want to get a feel for whether this is a realistic expectation.
Earnings. While the earnings reports continued last night and this morning, this afternoon is a key focus. That’s because Microsoft, Meta, Robinhood, Qualcomm, Arm, and Ford all report earnings. Analysts expect roughly 14% (GAAP) earnings growth from both Meta and Microsoft.
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The Setup — Alphabet
Magnificent 7 earnings are in focus this week, but Alphabet already delivered a pretty solid quarter last week. The company beat on earnings and revenue and showed solid growth in its key businesses like search and cloud.
The stock’s initial rally stalled, but it’s now trying to find the energy to continue higher. Alphabet still has the lowest valuation in the Mag 7 group (via its forward P/E ratio).
Because of its solid earnings results, low valuation, and recent price momentum, bulls are likely looking for Alphabet’s short-term moving averages to act as support. Ideally, investors want to see the stock stay above the $180 breakout area in the days and weeks ahead.
Moving forward, bulls ultimately want to see shares take out the recent high ($197.95) and go on to fill the gap up toward $203 (that’s the blue box on the chart above). Eventually, bulls want to see Alphabet take out its highs near $207.
Options
As of July 29th, the options with the highest open interest for GOOGL stock — meaning the contracts with the largest open positions in the options market — were the December 2026 $300 calls, the September $210 calls, and the January 2026 $260 calls.
For some investors, options could be one alternative to speculate on GOOGL. Remember, the risk for options buyers is tied to the premium paid for the option — and losing the premium is the full risk.
Bulls can utilize calls or call spreads to speculate on further upside, while bears can use puts or put spreads to speculate on the gains fizzling out and GOOGL rolling over.
For those looking to learn more about options, consider visiting the eToro Academy.
What Wall Street Is Watching
Starbucks stock is rallying in pre-market trading after the firm reported mixed quarterly results last night. Earnings missed analysts’ expectations, but revenue of $9.5 billion beat expectations of $9.3 billion as CEO Brian Niccol said the firm’s turnaround plans were “ahead of schedule.” Check out the charts for SBUX.
Shares of SoFi initially spiked to multi-year highs after better-than-expected earnings results. While shares were up more than 20% at one point in the session, SoFi ended higher by just 6.6%. Now it’s down this morning after the company announced a $1.5 billion shelf offering.
Shares of UPS tumbled on Tuesday, falling over 10% and sending the stock to new 52-week lows. The company missed on earnings and beat revenue expectations, but did not provide guidance due to ongoing economic uncertainty. The dividend yield is now above 7% after the fall. Dig into the fundamentals for UPS.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.