Sign InThursday Markets: ECB Holds Rates, United Airlines' Profit
Alex Vellor
On Wednesday, the Nasdaq Composite faced its steepest drop since 2022, plunging 2.77% and closing below 18,000. This significant downturn was driven by a continued rotation out of mega-cap technology shares.
The S&P 500 also declined, losing 1.39%. In contrast, the Dow Jones Industrial Average, with less exposure to tech, rose by 243.60 points, or 0.59%, closing above 41,000 for the first time ever. This shift away from tech stocks reflects traders' growing optimism that the Federal Reserve will cut interest rates, benefiting small caps and companies with higher financing costs.
United Airlines’ Q2 Profit Soars
United Airlines (NYSE: UAL) reported a more than 20% increase in profit for the second quarter, driven by strong international travel demand.
This trend highlights the airline's resilience, as many carriers struggle with a surge in domestic capacity that has pressured airfares. Despite the positive earnings report, United's third-quarter forecast fell short of expectations. The airline expects to earn between $2.75 and $3.25 per share on an adjusted basis, below the $3.44 anticipated by analysts polled by LSEG. Nevertheless, United reaffirmed its full-year forecast, signaling confidence in its long-term outlook.
Premarket Movers:
| Company | Stock Change | Reason |
|---|---|---|
| Taiwan Semiconductor Manufacturing (NYSE:TSM) | +1.1% | Posted a 36% rise in second-quarter net profit due to increased demand for semiconductors used in AI applications. |
| Netflix (NASDAQ:NFLX) | +0.3% | Stock rose ahead of quarterly results, with guidance for lower net subscriber additions in the second quarter. |
| DR Horton (NYSE:DHI) | -2.1% | Trimmed full-year revenue outlook despite beating estimates for quarterly profit; approved a new $4 billion share buyback authorization. |
| Domino’s Pizza (NYSE:DPZ) | -12% | Missed estimates for quarterly same-store sales due to inflation worries discouraging U.S. consumers. |
| Beyond Meat (NASDAQ:BYND) | -13% | Engaged with bondholders to discuss restructuring its balance sheet. |
| Novartis (SIX:NOVN) | -2.1% | Raised profit guidance despite reporting second-quarter profit and sales ahead of expectations. |
| Infosys (NS:INFY) | +3.8% | Reported growing profits and forecasted a slight pickup in sales growth for the year. |
| Blackstone (NYSE:BX) | -0.8% | Posted a modest rise in second-quarter distributable earnings, with asset sales in private equity and credit divisions offsetting a slump in its real estate arm. |
ECB Holds Rates Steady Amid Inflation Concerns
On Thursday, the European Central Bank (ECB) decided to keep interest rates unchanged at 3.75%, following a cut in June.
This decision comes amid ongoing concerns about inflation, particularly from the labor market. The ECB noted that financing conditions remain restrictive and domestic price pressures are still high.
Services inflation is elevated, and headline inflation is expected to stay above target well into next year. Eurozone headline inflation dipped slightly to 2.5% in June, down from 2.6%, but core inflation, excluding energy and food, held steady at 2.9%, above expectations.
Analysts believe the ECB will wait for more data on wages, economic growth, and productivity before making further changes to monetary policy. The June rate cut, the first since 2019, was influenced by the inflation outlook, underlying inflation dynamics, and the strength of monetary policy transmission.
About The Author
Alex Vellor
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