The Day at a Glance | July 17 2024

The Top

• US industrial production surprised to the upside in June.

• The Timely Indicator of Private Consumption estimates that household consumption increased 4.2% in May and 3.5% in June.

• US Federal Reserve authorities indicate that the Fed is approaching a point where it can begin to cut the federal funds rate, although uncertainty about the economic trajectory makes it unclear when the first cut might occur.

• The World Trade Organization said that China’s industrial support programs lack transparency.

• Inflationary pressures in the UK remain high, reducing the likelihood of an interest rate cut in August.

• Oil prices rose on Wednesday, a day after the Brent benchmark hit a one-month low, as a decline in US oil stockpiles and a weaker dollar overshadowed signs of weakening demand in China.

• The S&P 500 is down as investors continue to dump tech winners like Nvidia. 

Economic Environment

US industrial production surprised to the upside in June. Industrial activity increased 0.6% m/m in June, exceeding expectations of a 0.3% m/m figure. Consequently, industrial production rose by 4.3% at an annualized quarterly rate in the second quarter of the year, according to seasonally adjusted figures. Manufacturing increased by 0.4% m/m, while mining and utilities rose by 0.3% m/m and 2.8% m/m, respectively. The capacity utilization rate in the industrial sector stood at 78.8% in June, 0.9 percentage points below its long-term average level (1972-2023), suggesting few inflationary pressures from the cost side. On an annual basis, US industrial production increased by 1.6% at the end of the second quarter of 2024. By components, manufacturing increased by 1.1% y/y, electricity generation by 7.9% y/y, while mining decreased by -0.6% y/y. The end-of-Q2 2024 figures are encouraging as industrial production continues to expand, especially manufacturing, which has continued its momentum, suggesting that we should see foreign demand regain strength for our country.

Markets and Companies

The S&P 500 is down as investors continue to dump tech winners like Nvidia. Apple and Tesla fell around 2% before the opening bell. This seems to offer the latest sign that investors are pulling back from megacap tech companies after the group’s monstrous run this year. In Europe, markets are down as UK inflation holds steady. The Stoxx 600 was down -0.57% at 12:09 p.m. London time; tech stocks fell -3.17%, while banks rose +0.33%. In Asia, Japan’s Nikkei fell -0.43% and closed at 41,097, while the Topix was up +0.37% and closed at 2,915. Regarding commodities, oil prices are up on Wednesday, a day after Brent hit a one-month low, as a decline in US oil stockpiles helped offset signs of weakening demand in China. Metals are logging mixed figures, and cryptocurrencies are mostly down. In Mexico, the IPC is slightly up (+0.03%) and stands at 54,384points.

After yesterday’s trading session, the exchange rate fluctuated between a low of 17.65 and a high of 17.80, currently trading at 17.78. 

During 2Q24, América Móvil reported a 1.5% y/y rate of growth in revenues and a 5.6% y/y increase in EBITDA.The results set in line with expectations, so we see a neutral implication from the report. At the operational level, the number of mobile subscribers increased by 3.6% y/y, reaching 314 million. We highlight the improvement in the EBITDA margin.

In 2Q24, Nemak reported a 4.6% y/y drop in revenues, due to a 6.2% y/y drop in volumes, driven by declines in both the US and Europe. Operating cash flow increased by 6.0% y/y. The results set in line with expectations.

Corporate News

• Some of the largest semiconductor stocks fell following a Bloomberg News report that said the Biden administration is contemplating stiffer trade restrictions over concerns that US companies are giving China too much access to domestic semiconductor technology. Nvidia pulled back 4.4%, while Taiwan Semiconductor and AMD declined 4.7% and 4.1%, respectively.

• Shares of Five Below plummeted more than 15% after the company slashed its second-quarter outlook and announced the departure of CEO Joel Anderson.