Stock Indexes Mixed Ahead of Alphabet's Earnings

The S&P 500 Index ($SPX) (SPY) today is down -0.09%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.10%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.29%. September E-mini S&P futures (ESU26) are down -0.07%, and September E-mini Nasdaq futures (NQU26) are down -0.22%.

Stock indexes are under modest today amid weakness in software and cybersecurity stocks. The markets are waiting for earnings results after the close today from Alphabet to see evidence that the company's investments in artificial intelligence are generating returns, as it plans to more than double capital spending from 2025 to as much as $190 billion this year. On the positive side, energy producers and service providers are moving higher with today's rally in WTI crude oil to a 6-week high.

PayPal Says a $53 Billion Takeover Offer from Stripe Undervalues It. How to Play PYPL Stock Here.

Billionaire Jeff Bezos Called Amazon's Customer Service to Prove a Point But Waited in Silence for More Than 10 Minutes — 'It Was Really Long'

Micron Stock Is Near Bear-Market Territory. Here's Why ASML's Guidance Says Buy the Dip.

Soaring WTI crude oil (CLU26) prices are also pushing bond yields higher and are weighing on stocks. Crude oil is up more than +2% today to a 6-week high after the US and Iran played down the prospects of peace talks as disruptions to global oil supplies continued to mount. The 10-year T-note yield climbed to a 2-month high of 4.66% today amid rising crude oil prices.

The US conducted an 11th straight day of attacks on Iran today in an effort to degrade the country's ability to threaten commercial shipping in the Strait of Hormuz. Iran retaliated by striking US bases in Bahrain, Kuwait, and Jordan. President Trump said on Tuesday that the US has "no interest" in meeting with Iran until they are ready for serious peace negotiations.

Also, the Joint Maritime Information Center, a monitoring body for naval security, said the Iran-backed Houthi rebels have deployed missiles and drones in preparation for attacks on shipping in the Red Sea. The Houthis have vowed to blockade shipping linked to Saudi Arabia and warned shipowners against calling at the nation's ports. The move threatens Saudi oil exports from Yanbu, a Red Sea hub that the Saudi's are using to ship crude since the war brought shipping through the Strait of Hormuz to a near halt. President Trump said Tuesday that if there is a blockade in the Red Sea, the US "will take care of it."

US MBA mortgage applications rose +1.9% in the week ended July 17, with the purchase mortgage sub-index up +5.5% and the refinancing mortgage sub-index down -2.4%. The average 30-year fixed rate mortgage rose +4 bp to an 11-month high of 6.69% from 6.65% in the prior week.

The outlook for strong Q2 earnings, which begin in earnest this week, is a bullish factor for stocks. Forecasts compiled by Bloomberg Intelligence suggest Q2 earnings may increase by +23%, close to Q1's blowout earnings of +30%, which was more than double the +12% analysts had expected. AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2. So far, earnings results have been positive as 91% of the S&P 500 companies that reported Q2 earnings results have beaten estimates, according to data compiled by Bloomberg.

The markets are discounting a 34% chance of a +25 bp rate hike at the next FOMC meeting on July 28-29.

Overseas stock markets are mixed today. The Euro Stoxx 50 climbed to a 2-week high and is up +0.55%. China's Shanghai Composite closed up +0.07%. Japan's Nikkei-225 Stock Average closed down -0.18%.

September 10-year T-notes (ZNU6) today are down -7 ticks, and the 10-year T-note yield is up +2.6 bp at 4.655%. Sep T-notes tumbled to a 17-month nearest-futures low today, and the 10-year T-note yield rose to a 2-month high of 4.659%. T-notes are sliding today, with WTI crude oil prices up more than +2% to a 6-week high, which raises inflation expectations and is a hawkish factor for Fed policy. The 10-year breakeven inflation rate rose to a 1-week high of 2.288% today. Also, supply pressures are weighing on T-notes as the Treasury will auction $13 billion of 20-year T-bonds later today.

European government bond yields are moving higher today. The 10-year German bund yield rose to a 2-month high of 3.192% and is up +2.1 bp to 3.184%. The 10-year UK gilt yield climbed to a 2-month high of 5.065% and is up +2.4 bp to 5.054%.

UK Jun CPI eased to +2.6% y/y from +3.8% y/y in May, weaker than expectations of +2.7% y/y and the slowest pace of increase in 15 months. However, Jun core CPI was unchanged from May at +2.6% y/y, stronger than the +2.5% y/y expected.

Swaps are discounting a 5% chance of a +25 bp ECB rate hike at its next policy meeting on Thursday.

Software stocks are under pressure today, weighing on the broader market. Atlassian Corp (TEAM) is down more than -5%, and Workday (WDAY) is down more than -5% to lead losers in the Nasdaq 100. Also, ServiceNow (NOW) and Palantir Technologies (PLTR) are down more than -4%, and Salesforce (CRM) is down more than -3% to lead losers in the Dow Jones Industrials. In addition, Datadog (DDOG) and Autodesk (ADSK) are down more than -3%, and Microsoft (MSFT) and Adobe Systems (ADBE) are down more than -2%.