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Important News for Investors to Start Their Trading Day
Dow Jones Industrial Average Extends Winning Streak
The Dow Jones Industrial Average rose for the ninth consecutive day on Thursday, marking its longest winning streak since September 2017. During the session, the index added 0.47% and reached its highest level in 15 months. The strong performance was largely driven by better-than-expected earnings from drugmaker and Dow component Johnson & Johnson. However, disappointing earnings updates from Netflix and Tesla dragged down the broader market, with the S&P 500 falling 0.68% and the tech-heavy Nasdaq Composite dropping 2.05%. Follow live market updates as the Dow aims for a 10th consecutive day of gains.
Existing Home Sales Show a Decline
In June, existing home sales were down 3.3% from the previous month, according to the National Association of Realtors. This marks another challenging month for the housing market. Compared to June 2022, sales of pre-owned homes were down 18.9%, representing the slowest sales pace for the month of June since 2009. The decline can be attributed to a shortage of supply, as there were just 1.08 million homes for sale at the end of the month, a 13.6% decrease from the previous year. Chief economist for the Realtors, Lawrence Yun, explains that there simply aren't enough homes for sale.
Voluntary Commitments Made by AI Companies
Seven top artificial intelligence companies, including Amazon, Google, and Microsoft, have agreed to a set of voluntary commitments facilitated by the Biden administration. These commitments focus on public access to the technology, security, and transparency in development. As more companies and the general public adopt AI, concerns around safeguards have been raised. Congress is considering implementing rules around AI, but it may take time for standards to be established as lawmakers familiarize themselves with the technology and its potential risks.
Cargo Revenue Declines for Major Airlines
The major airlines are experiencing a sharp decline in cargo revenue compared to the previous year. Delta, United, and American have all reported approximately 40% decreases in their cargo business unit for the second quarter. However, this decline is actually positive news. During the height of the COVID-19 pandemic, travel restrictions reduced cargo capacity on passenger planes, leading to increased shipping costs. Now, with travel rebounding and demand for air cargo declining, shipping rates have dropped, resulting in decreased cargo revenue for the major carriers.
Ukraine's Counterattack against Russia
Defense experts warn that Ukraine's counterattack against Russia is taking longer than expected, and time may be running out. Kyiv launched its counteroffensive in June after months of planning, while Moscow strengthened its forces along the border. Ukraine has a limited window of a few more summer months to penetrate the front line before weather conditions worsen. Experts predict a grind attritional fight in the coming months, with Ukrainian forces incrementally advancing and striking the Russian rear. The ultimate success of this strategy remains uncertain. Follow live war updates for the latest developments.
Conclusion: Impact on New Business
The current news updates have significant implications for new businesses entering the market. Here are some key takeaways:
Dow Jones Industrial Average:
- The Dow's extended winning streak indicates a positive sentiment in the market, driven by strong earnings from companies like Johnson & Johnson.
- New businesses can benefit from this bullish market sentiment, as investors are more likely to take risks and seek investment opportunities.
- However, the overall market downturn due to disappointing earnings from Netflix and Tesla indicates the importance of carefully analyzing specific sectors and companies before making investment decisions.
Existing Home Sales:
- The decline in existing home sales highlights the ongoing challenges in the housing market, particularly the shortage of supply.
- New businesses in real estate and construction sectors may face difficulties due to limited inventory and increased competition.
- However, there could be potential opportunities for businesses that offer innovative solutions to address the housing shortage, such as affordable housing initiatives or technology-driven solutions for home construction and renovation.
Voluntary Commitments Made by AI Companies:
- The voluntary commitments made by AI companies suggest a growing recognition of the need for transparency and security in AI development.
- New businesses entering the AI industry should prioritize these commitments to build trust with customers and regulatory bodies.
- Investing in AI with a focus on ethical considerations can set new businesses apart from their competitors and ensure long-term success.
Cargo Revenue Declines for Major Airlines:
- The decline in cargo revenue for major airlines is a result of changing market dynamics, with reduced demand for air cargo and lower shipping rates.
- New businesses in the logistics and shipping industry may face challenges in generating revenue from air cargo.
- However, this decline also presents an opportunity to enter the market at a lower cost, as shipping rates have dropped. New businesses can utilize this situation to offer competitive pricing and attract customers.
Ukraine's Counterattack against Russia:
- The ongoing conflict between Ukraine and Russia poses significant geopolitical risks, which can have indirect impacts on new businesses.
- Businesses operating in or relying on trade with the affected regions may face disruption and uncertainty.
- However, businesses that provide services or products that help mitigate the impact of geopolitical risks, such as risk assessment or crisis management solutions, may find opportunities in this environment.
In summary, new businesses should stay informed about the market and geopolitical developments to navigate challenges and identify opportunities. Adapting strategies based on the current trends and needs of the market can ensure a competitive edge and a higher chance of success.Article First Published at: https://www.cnbc.com/2023/07/21/5-things-to-know-before-the-stock-market-opens-friday-july-21.html