US Stock Market Trend (July 27): Tesla Records Largest Weekly Drop Since 2022, MAG7 and Storage Giants Line Up to Report Earnings This Week

By: TechFlow Research

Last Friday, the three major indices diverged. The S&P 500 barely closed higher, and the Dow Jones halted its two-day decline, but the Nasdaq hit a new low in nearly three months, falling 2.13% for the week. Selling pressure spilling over from South Korea's tightened leverage ETF trading rules affected US chip stocks. Earnings season became a hard-hit zone, with Tesla and Google both recording their rarest single-week largest declines. Over the weekend, the US and Iran paused mutual strikes, but Houthi forces in the Red Sea targeted Saudi ports instead. This week brings a super week, with the Federal Reserve, Bank of Japan, and Bank of England announcing interest rate decisions in sequence, while the four giants Microsoft, Meta, Apple, and Amazon join SK Hynix, Samsung Electronics, and Kioxia in densely releasing earnings.

Market Performance

The S&P 500 rose 0.05%, closing at 7411.98 points, down 0.61% for the week. The Dow Jones rose 0.46%, closing at 51947.25 points, down 0.38% for the week, but has now fallen for three consecutive weeks. The Nasdaq fell 0.64%, closing at 24975.824 points, down 2.13% for the week, hitting a new low in nearly three months.

Chip stocks were the hardest hit last Friday, with the index falling over 4%. SanDisk dropped over 10%, and Intel fell nearly 8% despite decent earnings.

Earnings week performance was polarized. Tesla plunged nearly 18% for the week, marking the largest single-week drop since 2022. Google fell nearly 8% for the week. Apple rebounded significantly, rising 3.5% in a single day, driving Microsoft and Google to recover together. Among the Magnificent Seven, only Nvidia maintained gains for the week.

WTI crude oil settlement price fell 3.12%, closing at $89.31 per barrel, but still up 9.21% for the week. Brent crude oil settlement price fell 3.88%, closing at $96.78 per barrel, up 9.85% for the week. COMEX gold rose 0.52%, closing at $4067.6 per ounce, up 1.37% for the week. COMEX silver rose 1.48%, closing at $58.656 per ounce, up 4.67% for the week. Bitcoin opened Friday at $65047.87, down 1.6% from Thursday, and briefly fell below $64,000 during the week. Ethereum opened at $1876.92, down 2.9%.

The 10-year US Treasury yield closed at 4.68%, up about 13 basis points for the week. The 2-year US Treasury yield closed at 4.33%, up about 15 basis points for the week.

Macro and Outlook

A rare cooling signal emerged in geopolitical tensions over the weekend. Pakistan mediated, conveying to Iran that stopping attacks on Gulf countries was a prerequisite for restarting negotiations. Trump's stance also softened considerably; he said he was more willing to sit down and talk, feeling that Iran's sincerity shown in this round was the most substantial in a long time.

On Saturday, Trump ordered a pause on airstrikes against Iran to create space for diplomacy, and the Iranian military confirmed on Sunday that both sides had stopped mutual strikes for two consecutive nights. However, the White House simultaneously emphasized that all military options remain on the table; this pause was more like a tactical breather, not a complete de-escalation.

New risk points emerged in the Red Sea direction. Yemen's Houthi forces attacked Saudi Red Sea port oil facilities twice in a single day on Saturday. The Saudi-led multinational coalition immediately launched airstrikes in response, the first time the coalition has publicly acknowledged conducting airstrikes since the ceasefire agreement was reached four years ago. What really causes concern is Yanbu. After the Strait of Hormuz channel was blocked, Yanbu became the only route left for Saudi crude oil exports. If this route encounters problems, the global energy market will have virtually no retreat.

At the beginning of Monday's Asia-Pacific session, as news of the US-Iran pause in mutual attacks spread, international crude oil futures opened sharply lower, with Brent once falling over 7%, dropping below $90.

Not all voices are worried that geopolitical risks will continue to suppress the stock market. Yardeni Research and Fundstrat dug up old accounts from earlier this year. During the first round of US-Iran military confrontation, the S&P 500 also fell about 10%, but it bounced back shortly after. Historically, such geopolitical shocks have more often provided opportunities to build positions at low levels. The pessimistic sentiment眼下 might be overdone.

Divergence signals are also beginning to appear in the AI capital expenditure boom among tech giants. Morgan Stanley reminded that the狂欢 in AI storage is nearing its end, and memory contract prices are likely to peak in the fourth quarter. The proportion of institutions upwardly revising earnings for storage vendors once reached 92%, but has now fallen to 77%, with valuations for SK Hynix and Samsung also pulling back.

"The Big Short" Michael Burry added fuel to the fire last weekend, publicly expanding his short positions on Nvidia and Micron. His reasoning is that a large part of the seemingly fierce order demand on these companies' books is ultimately propped up by off-balance-sheet financing arrangements cycling around, and the component of end customers actually paying is not as high as it appears on the surface.

Whether these divergence signals can be answered largely depends on this week's schedule. This week is a rare super week for the global market. The Federal Reserve will announce its interest rate decision early Wednesday morning. The market generally expects rates to remain unchanged. Chairman Wash's press conference after the meeting will be the focus, as investors want to read signals from it on whether rate hikes will restart in September. The Bank of Japan and the Bank of England will also announce decisions on Friday and Wednesday respectively, and both are expected to stand pat.

The US June PCE price index will be released on Wednesday. This is the inflation indicator the Fed values most, and oil prices breaking above $100 again brings upside risks to this data.

Earnings season enters its most dense week. On Wednesday, Microsoft, Meta, and SK Hynix announce first. On Thursday, it turns to Apple, Amazon, and Samsung Electronics. On Friday, Kioxia closes the show. The cloud business growth rates and AI monetization capabilities of the four tech giants, plus the statements from the three storage chip giants on HBM shipments and general storage pricing, will jointly determine the next direction of this round of AI capital expenditure narrative.

TechFlow Perspective

Last Friday's market divergence already foreshadowed this week's core contradiction. Rise and fall at the index level can no longer fully reflect the true attitude of capital. What truly determines the direction is whether several specific signals can be realized. The records set by Tesla and Google's single-week declines indicate that the market's patience with AI investment and output has been almost exhausted. This week's dense earnings season will directly test whether this patience has truly bottomed out.

Besides the earnings main line, the Middle East situation is another variable that cannot be ignored. The Middle East chess game is far from over, and tactical adjustments by any side could be broken by new conflict points within days. The optimistic judgment of the historical experience school has some merit, but the complexity and the scale of capital involved in this instance are greater than earlier rounds of conflict. Simply applying the experience of "geopolitical risk equals buying opportunity" requires more caution.

Besides earnings and geopolitics, the storage chip line is also fighting itself. This constitutes another dark line worth paying attention to this week. If the earnings and guidance of the three storage giants this week remain strong, these warnings will be proven too pessimistic. If earnings reveal even a hint of weakness, coupled with possible hawkish signals released by Fed Chairman Wash, the market is likely to welcome a more violent repricing.