Stock Market Mid-Session Recap for July 19, 2022

Key Points

• US and European equities rallied across the board, with the S&P 500 gaining nearly 2.0% and Stoxx 600 1.5%.
• Reportedly, Russia will restart gas flows via Nord Stream 1 on Thursday as scheduled, easing energy crisis fears.
• The Stoxx 600 broke out to fresh multi-week highs, while the S&P 500 remains capped below recent highs.

US Indices Rally But Remain Capped Below Recent Highs

Major US indices rallied on Tuesday, with the S&P 500 gaining nearly 2.0% to hit fresh weekly highs above 3,900. The Nasdaq 100 was last up about 2.2% and trading in the mid-12,100s. Both indices, for now, remain capped below recent highs in the respective 3,920-3,950 and 12,170ish areas.

Sentiment was boosted on Tuesday amid reports that Russia is going to restart gas flows to Europe via the Nord Stream 1 pipeline as expected once planned maintenance concludes on Thursday, easing fears about a full-blown energy crisis and resultant recession in Europe that would act as a drag on global growth. Analysts have also, for the most part, taken a positive view on the start of the US earnings season.

Earnings in Focus, Apple Attempts Recovery, Boeing Gets a Boost

Earnings were in focus once again on Tuesday, with the impact of the recent surge in US dollar strength a key theme. In earnings released late on Monday, IBM (-6.2%) said the dollar surge had cost it $3.5 billion, while Johnson & Johnson (-0.3%) had to reduce its annual profit forecast, though its share price was still relatively well supported given the company’s Q2 earnings exceeded forecasts.

Elsewhere, investors were also closely monitoring movements in Apple’s (+1.9%%) share price, after prices fell over 2.0% on Monday amid reports that the company plans to slow hiring and spending growth in 2023 given an increasingly dim outlook. In other stock-specific news, Boeing (+4.1%) shares rose after private equity firm 777 Partners announced plans to buy 66 further Boeing 737 MAX jets.

Stoxx 600 Breaks Out to Fresh Multi-week Highs as Energy Crisis Fears Ease

Reports that Russia is to restart gas flows through the Nord Stream 1 pipeline into Europe as expected on Thursday saw major European equity indices break higher. The pan-European Stoxx 600 index vaulted above resistance around 420 to reach the 423s, its highest level since 10 June. The index closed 1.4% higher on the day and is now convincingly back above its 50DMA for the first time since mid-April.

Aside from an easing of energy crisis fears, a standout story in European equity markets on Tuesday was the French government’s proposal to buy out EDF for 12 euros a share and take full control of the company. The French government wants more control over the energy sector in order to get France through the ongoing European energy crisis. EDF shares were up x% as a result.