Good morning investors! The S&P 500 hit a new high of 6,300 as investors remain bullish.
Today we cover:
Homebuilders are cutting prices
Retail sales
Netflix and more announce earnings
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📊 Economy and News
Homebuilders continue to cut prices
Homebuilders are cutting prices at the highest rate since 2022, with 38% reducing prices by an average of 5% in July, up from 29% in April.
This follows weakened demand due to high interest rates and affordability issues. The National Association of Home Builders (NAHB) reports a slight uptick in builder confidence to 33, driven by a new budget act offering tax relief. However, sentiment remains negative (below 50) for over a year.
Mortgage rate buydowns are common, but price cuts are impacting builder margins more.
Current sales conditions rose to 36, and six-month sales expectations climbed to 43, but buyer traffic fell to 20.
Single-family housing starts are projected to decline in 2025 due to affordability challenges, with permits down 6% year-to-date. Regionally, the Northeast saw a 2-point sentiment rise, while the South and West weakened further.
In related news, the 30-year fixed sits at 6.625%.
Global hits:
Fed’s Daly expects two rate cuts this year as the tariff impact is muted.
Japan’s core inflation cools in June as expected, coming down from 29-month high as rice prices ease. On the other hand, Russia’s July inflation expectations are steady at 13%, supporting case for rate cut.
Britain plans to lower voting age to 16 for all UK elections.
China to lower threshold for luxury car consumption tax.
Should 16 year olds be allowed to vote?
Tariffs news: US set to impose 93.5% tariff on graphite from China as US solar panel makers seek tariffs on imports from Indonesia, India, and Laos.
Retail Sales Rebound in June
Retail sales climbed 0.6% to $720.1B in June, up 3.9% YoY, recovering from May’s 0.9% drop.
Retail trade sales (excluding vehicles, parts, and gas) also rose 0.6%.
Key gains included nonstore retailers (+0.4%), food and beverage (+0.5%), health and personal care (+0.5%), general merchandise (+0.5%), clothing (+0.9%), and miscellaneous retailers (+1.8%). Furniture and electronics dipped 0.1%.
Despite rising consumer prices (CPI up 0.3% in June, 2.7% YoY), consumer sentiment improved 16.3% from May, per the University of Michigan, though it’s still below December 2024 levels.
The CNBC/NRF Retail Monitor reported a 0.32% monthly drop but 3.36% YoY growth, suggesting economic uncertainty and tariffs may be prompting cautious spending.
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📈 Stocks
S&P 500 6,297.36 (+0.54%)
DJIA 44,484.49 (+0.52%)
NASDAQ 20,885.65 (+0.75%)
BRENT CRUDE 69.67 (-0.01%)
* Prices as of Jul 18th, 12:20 AM UTC
Netflix Q2 2025 Earnings Surge, but Margin Concerns Loom
Netflix reported a strong Q2 2025, with revenue hitting $11.08 billion, up 16% year-over-year, surpassing LSEG's $11.07 billion estimate.
Earnings per share reached $7.19, beating the expected $7.08, while net income rose to $3.1 billion from $2.1 billion last year.
Free cash flow surged 91% to $2.3 billion, prompting Netflix to raise its full-year guidance to $8-$8.5 billion. The company also boosted its full-year revenue forecast to $44.8-$45.2 billion, citing robust member growth and ad sales.
Operating margin improved to 34.1%, up 7 points, though Netflix warned of a dip in the second half due to higher content and marketing costs for upcoming releases like Wednesday Season 2, Stranger Things finale, Happy Gilmore 2, and Guillermo del Toro’s Frankenstein. Shares fell about 1% after hours, likely reflecting these margin concerns. Netflix no longer reports quarterly subscriber data.
Exciting: OpenAI is ready to introduce the ability to shop online using ChatGPT agents. Also, Robot Consulting debuts on Nasdaq at $4 per share. Lastly, the Interior Department said it was ending preferential treatment for renewables and “leveling the playing field” for coal and natural gas.
PepsiCo Q2 2025 Earnings: Strong Results, Turnaround Plan Unveiled
PepsiCo reported Q2 2025 earnings and revenue surpassing Wall Street expectations, with adjusted earnings per share of $2.12 (vs. $2.03 expected) and revenue of $22.73 billion (vs. $22.27 billion expected).
Net income fell to $1.26 billion from $3.08 billion a year ago, but organic revenue grew 2.1%. Despite a 1.5% drop in global food volume and flat beverage volume, PepsiCo's North American business showed improvement, with Pepsi soda and Pepsi Zero Sugar gaining volume.
The company outlined a turnaround plan focusing on healthier snacks, multicultural offerings like Siete Foods and Sabra, and relaunched Lay’s and Tostitos.
Cost-cutting measures include closing two plants and optimizing logistics and marketing. PepsiCo reiterated its full-year outlook, expecting flat core earnings and low single-digit organic revenue growth.
TSMC Profit Soars 61% on AI Chip Demand
Taiwan Semiconductor Manufacturing Company (TSMC) reported a 61% year-on-year profit surge in Q2 2025, reaching NT$398.27 billion, beating expectations. Revenue grew 38.65% to NT$933.80 billion, fueled by demand for AI chips, with high-performance computing (HPC) contributing 60% of sales. Advanced chips (7nm or smaller) made up 74% of wafer revenue.
TSMC forecasts Q3 revenue between $31.8 billion and $33 billion, a 38% increase, and expects 30% annual revenue growth in 2025.
Banks are attractive: The six largest U.S. banks, including JPMorgan Chase, generated $39 billion in Q2 2025 profits, a 20% increase from last year, fueled by robust stock and bond trading, corporate mergers, and loan growth.
Despite early market turmoil from “Liberation Day” tariffs, delayed punitive measures and a new spending bill have spurred optimism. JPMorgan alone earned $15 billion, with investment banking revenue up 7%.
Bank leaders like JPMorgan’s Jamie Dimon and Wells Fargo’s Charlie Scharf express confidence in the economy with some investors showing more interest in these names.
Lucid Shines in Uber-Nuro Robotaxi Deal
Lucid Group ($LCID) surged 36.25% Thursday after announcing a partnership with Uber and Nuro to deploy 20,000+ Lucid Gravity SUVs with Nuro’s self-driving tech on Uber’s platform, backed by a $300M investment from Uber’s SMB Holding. The service aims to launch in a major U.S. city in 2026. Uber ($UBER) dipped 0.28% due to the deal’s cost.
The partnership positions Lucid as a key player in the intensifying self-driving race, competing with Waymo and Tesla, who are expanding in Austin. Nuro, with 1.4M autonomous miles, mostly in Las Vegas, strengthens the trio’s bid.
💵 Personal Finance
How prices are changing due to
Walmart, the largest U.S. retailer, has increased prices on select items like a Beautiful 12-piece cookware set (from $99 to $149), a Graco car seat (from $199.99 to $299), and Levi’s jeans (from $23.98 to $24.98) at its Secaucus, NJ store, reflecting new tariffs on imports, particularly from China (30%) and countries like Pakistan (10%).
Most of the 50 tracked products, including groceries, saw no change.
Nationwide, June inflation data shows apparel and household furnishings up by 0.4% and 1%, respectively.
Retailers like Best Buy and Costco also report price hikes.
Early imports and supply chain strategies have limited some increases, but holiday season prices for toys and decorations may rise further.
Here’s an interesting video on prices:
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