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JULY 26, 2023

LOW TRADING ACTIVITY

The amount of Bitcoin being bought and sold has decreased to its lowest level in 30 months while the price of Bitcoin remains below $30,000 due to the calmness in the market, resulting in less price movement. Experts believe that this period of slow activity will likely be followed by increased volatility as traders become accustomed to stability. In addition, investors are awaiting the decisions on interest rate hikes, as well as, spot exchange-traded fund applications in the U.S. to determine Bitcoin price.

INTEREST RAISE EXPECTED

Federal Reserve policymakers are expected to raise interest rates to the highest level in 22 years, with a quarter-point increase to the 5.25% to 5.5% range. This would be the 11th rate hike since early 2022, and the decision will be released at 2:00 PM EST in Washington, followed by a press conference by Chair Jerome Powell. While investors see this rate hike as almost certain due to diminishing inflation pressures, they will be listening for any clues about the possibility of additional increases later in the year. Moreover, the Federal Open Market Committee (FOMC) statement might address the soundness and resilience of the banking industry, but there is debate about whether this statement is still necessary.

NOT UNIFORMLY POSITIVE

Microsoft and Alphabet, the parent company of Google, kicked off the earnings season for the mega-cap tech companies with mixed results. Alphabet’s earnings report was largely positive, with revenue and profit exceeding expectations and notable growth in its cloud-computing unit. The company’s YouTube ads and Google Cloud divisions also outperformed predictions, underlining its diverse strengths. On the other hand, although Microsoft’s revenue was strong, it fell short of expectations, and the company also grappled with economic concerns and digital ad spending pullbacks. Following these results, Alphabet’s shares soared by 7% in extended trading, while Microsoft faced a more cautious market response, with shares slipping up to 4%.

STRONG PERFORMANCES

Coca-Cola, AT&T, and Boeing all displayed positive financial performance in their respective quarters as Coca-Cola exceeded expectations, reporting strong earnings and revenue. Despite facing higher commodity costs, Coca-Cola’s pricing strategy and product demand remained relatively stable, with some divisions like Coke Zero Sugar, Fairlife, and the coffee division showing positive growth. Additionally, AT&T’s second-quarter results were also impressive as they beat expectations for free cash flow with $4.2 billion. This increase was driven by successful cost-cutting measures and increased subscriber attraction. Moreover, Boeing’s performance improved as well, with higher commercial aircraft deliveries leading to $2.6 billion of free cash flow in the quarter, while maintaining its full-year guidance. Despite the recent challenges faced by airlines in increasing production, the demand for aircraft has remained strong, and Boeing’s revenue jumped 18% to $19.75 billion.

STAGNANT MORTGAGE RATES

Last week, mortgage rates remained unchanged at a recent high, leading to a decline in total mortgage applications by 1.8%. in addition, the average contract interest rate for 30-year fixed-rate mortgages also remained steady at 6.87%. Consequently, applications for home purchases dropped by 3%, with a significant 23% decrease compared to the previous year. The decline was particularly evident in Federal Housing Administration (FHA) applications, affecting lower-income buyers who find the market less affordable. On the other hand, applications to refinance home loans remained flat but were 30% lower compared to the same time last year. Furthermore, mortgage rates started this week higher, crossing 7%.

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