AI jitters, Big Tech earnings & the Fed decision

Summary

Moving Markets: AI Jitters, Big Tech Earnings & the Fed Decision

Podcast by Julius Baer – July 29, 2026
Host: Lucia Cculovic
Guests: Jan Bob (Markets Analyst), Dario Messi (Economics/Policy), Mathieu Rashte (Earnings/Equities)

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Episode Overview

This episode explores recent turbulence in global equity markets, with a particular focus on volatility in AI and technology sectors, earning seasons for major corporations, and anticipations around the upcoming US Federal Reserve decision. Lucia Cculovic is joined by Jan Bob for market highlights, Dario Messi for a macro/monetary policy outlook, and Mathieu Rashte to deep dive into the quarter’s corporate earnings.

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Key Discussion Points & Insights

1. Market Developments and Sector Rotation

Guest: Jan Bob

• US Market Divergence
  • Headline indices appeared stable, masking sharp sectoral moves.
    • “The NASDAQ... down more than 2%, entering correction territory... before finishing just 0.2% lower. The broader S&P 500... rose 0.2%, and the Dow Jones gained a full 1%. So what we are seeing here is a clear rotation away from technology and into more... traditional sectors.” (Jan, 00:55)
  • Semiconductors were especially weak:
    • SanDisk dropped 14% (after 11% the previous day),
    • Micron, AMD, Intel each fell ~8% (01:26).
• Defensive Sector Outperformance
  • Healthcare and consumer defensive stocks outperformed, with healthcare and financial indices hitting new all-time highs (01:45).
• Impact on Global Markets
  • Swiss SMI (healthcare-heavy) up 1%, outperforming most regions (02:06).
  • European indices (Euro Stoxx 600, DAX, CAC) each up ~0.5%.
  • Asian markets struggled, especially Korean and Japanese indices, due to weak semiconductor results from SK Hynix:
    • “Operating profits soared... 557% from a year earlier... Both figures fell short of very elevated expectations. The stock dropped as much as 17%... Since its June peak, SK has now lost more than half its value.” (Jan, 02:26)
    • Kospi fell >10%, Nikkei down ~2%, whereas China’s markets gained ~1% (03:15).

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2. Spotlight: Big Tech, IPOs, and Share Movements

Big Tech & Upcoming Results

• The week is critical for earnings, especially for Microsoft, Meta, Amazon (03:32).
• SpaceX, despite scraping back some losses, remains under pressure:
  • Down 20% from IPO price, nearly 50% from post-listing peak
    • “More than US$1.2 trillion in market value has been wiped out since the IPO.” (Jan, 04:01)
  • “Upcoming lockup expirations... could significantly increase the number of tradable shares.” (Jan, 04:01)
• Not all corporate news was negative:
  • “Coca Cola rose more than 5% after reporting better than expected results and raising its full year earnings outlook.” (Jan, 04:51)
    • World Cup ‘hydration breaks’ boosted Powerade sales (05:19).

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3. Commodities and Bonds Update

• Oil price volatility:
  • Down on Middle East de-escalation news, then spiked after US interception of Iranian missiles:
    • “WTI fell around 4% to below $80 per barrel... Oil prices jumped overnight after U.S. central Command reported the interception of Iranian ballistic missiles. So it remains a fragile situation in the Middle East.” (Jan, 05:36)
  • Lower oil supported falling bond yields across regions.
• Precious metals:
  • Gold, silver, platinum, palladium all declined as the US dollar strengthened and ahead of Fed decision:
    • “Gold fell more than 1%... $4,000 seems to be a solid support, at least for now.” (Jan, 06:08)

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4. Fed Rate Decision Preview

Guest: Dario Messi

• Backdrop and Fed Dynamics
  • Inflation jitters (energy prices higher and volatile), robust US labor market, signs of economic resilience.
    • “The economy quite resilient, quite well, quite good on a good footing and definitely something where the Fed doesn't want to give up on the hawkish tilt.” (Dario, 07:39)
  • Market expectation of a hike is about 30%, reflecting “a very undecided market”—exactly what the current Fed chair seeks to encourage:
    • “If you remember, that’s exactly what the Fed chair, the new Fed chair Wash, wanted. More debate, less forward guidance, and with that, more surprises at the end.” (Dario, 08:24)
• House View: Hold Expected
  • Julius Baer expects the Fed to hold rates and wait for more clarity on energy prices and inflation.
    • “We are in the camp of a hold... support among the FOMC for a hike is not fully here.” (Dario, 09:30)
  • The last CPI reading removed urgency; labor market appears balanced.
    • “I don't see enough evidence at this stage at least to justify immediate policy tightening.” (Dario, 10:17)
• Implications for Investors
  • If the Fed stays on hold, bond yields should fall modestly—a positive for fixed income.
    • “If the Fed stays on hold, bond yields should edge lower from current levels. That would definitely be a welcome development for fixed income investors...” (Dario, 10:33)

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5. Earnings Season Deep Dive

Guest: Mathieu Rashte

• Q2 Earnings: Broad Strength with Caveats
  • One-third of US companies have reported; 86% beat expectations (vs. long-term avg. of 76%).
    • “Corporate profitability remains quite very resilient.” (Mathieu, 11:28)
    • Europe also “solid, broadly in line with historical averages.”
  • S&P 500 Q2 earnings growth headline number: 38% YoY—distorted by one-off tech revaluations at Alphabet.
    • Excluding this, more realistic growth is ~26% (12:42).
    • “Even if you adjust... remains one of the strongest earnings seasons we've seen in recent years.” (Mathieu, 12:49)
• Muted Share Price Reaction
  • Despite beats, market responses are tepid; investors stricter on what’s rewarded.
    • “Good results are often no longer enough to drive meaningful upside because expectations were already very high, particularly in the technology sector. But disappointments continue to be penalized heavily.” (Mathieu, 13:55)
    • Companies beating both earnings and sales outperformed by 1.2 pts (vs. 1.4 pts avg), but those missing were down >3 pts.
• AI Spending: The Central Theme
  • “Without question, the biggest focus remains the large hyperscalers and their AI investment plans.” (Mathieu, 14:01)
  • Two questions: How much more will Big Tech spend on AI? Are those investments generating returns?
  • Example: Alphabet’s strong cloud business and higher capex—yet investors focused on costs, not just growth (15:10).
• What to Watch Next
  • “The biggest week of this earnings season is actually the current week, this week... Microsoft and Meta... Apple and Amazon... These companies should provide a much clearer picture of where the AI investment cycle is heading...” (Mathieu, 15:22)

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Notable Quotes & Memorable Moments

• “The NASDAQ spent much of the session down more than 2%, entering correction territory… So what we are seeing here is a clear rotation away from technology and into more, let's say traditional sectors.”
  — Jan Bob, 00:55

• “The company [SK Hynix] reported operating profits soared more than six fold... Both figures fell short of very elevated expectations. The stock dropped as much as 17%...”
  — Jan Bob, 02:26

• “If you remember, that's exactly what the Fed chair, the new Fed chair Wash, wanted. More debate, less forward guidance, and with that, more surprises at the end. So we are having here a pretty live meeting at this point in time.”
  — Dario Messi, 08:24

• “Good results are often no longer enough... because expectations were already very high, particularly in the technology sector. But disappointments continue to be penalized heavily.”
  — Mathieu Rashte, 13:55

• “The biggest focus remains the large hyperscalers and their AI investment plans. Investors continue to ask two key questions: how much more will companies… invest in AI infrastructure? And… are we starting to see clear evidence that these massive investments can generate attractive returns?”
  — Mathieu Rashte, 14:01

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Timestamps for Key Segments

• US Market Recap & Sector Moves: 00:44 – 03:32
• Big Tech & IPO Focus: 03:32 – 05:19
• Commodities & Bonds Overview: 05:19 – 06:26
• Fed Decision & Macro Insights with Dario Messi: 07:20 – 10:58
• Earnings Season Analysis with Mathieu Rashte: 11:20 – 15:55

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Summary Takeaways

• Substantial volatility is driven by sector rotation, with technology underperforming and defensives/some financials rallying.
• AI spending and Big Tech profitability dominate both earnings news and investor sentiment; share price reactions are muted unless exceptional or disappointing.
• The Fed’s policy stance remains highly uncertain; Julius Baer expects a hold, which would be positive for rates and fixed income.
• The coming days, with results from Microsoft, Meta, Amazon, and Apple, are key for assessing the sustainability of the AI/Big Tech investment wave—and broader market direction.

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For a deeper review of any themes, earnings breakdowns, or Fed outcomes, tune in to the next episode or explore official Julius Baer briefings.

Transcript

[A]

Good morning everyone and welcome to Julius Bears Moving Markets podcast. It is Wednesday 29th July and my name is Lucia Cculovic. I am your host today. So we have a packed agenda for you today. Starting off, we will be joined by my colleague Jan Bob who will take us through the latest market developments. And then I'll be speaking to Dario Messi for a preview on tonight's Fed decision. And finally, Mathieu Rashte will be on the show with us to delve deep deeper into the earnings season. But first, Jan, good morning. Great to have you with us.

[B]

Good morning Luzi. Thanks for having me.

[A]

So let's start with equities. Jan. At first glance, US markets looked fairly resilient yesterday. But beneath the surface, the picture was quite different.

[B]

Exactly, Luz here the headline numbers really masked a sharp divergence. The NASDAQ spent much of the session down more than 2%, entering correction territory, so down more than 10% from its June high before finishing just 0.2% lower. The broader S&P 500 however, rose 0.2% and the Dow Jones gained a full 1%. So what we are seeing here is a clear rotation away from technology and into more, let's say traditional sectors.

[A]

And Yan, semiconductor stocks really seem to be carrying the burden of the sell off. SanDisk extended that its losses falling another 14% after an 11% decline the previous day. Micron, AMD and Intel were also down around 8%.

[B]

Yes, Lucia, I mean those were violent moves, but other parts of the market, as I said, performed very well. Defensive sectors such as consumer defensives and healthcare outperformed. In fact, benchmark indices tracking healthcare and financial stocks even reached fresh all time highs yesterday.

[A]

And that helped European markets in particular. The healthcare heavy Swiss SMI gained 1% outperforming most regions. The euro, Stoxx 600, Germany's DAX and France's CAC all added around half a percent. But the pressure on chip makers intensified again in Asian trading overnight, didn't it?

[B]

Yeah, unfortunately yes. Lutz investors continued selling semiconductor shares after SK Hynix published results. Although operating profits soared more than six fold. That's 557% if you prefer percentages from a year earlier. And sales jumped 257%. Both figures fell short of very elevated expectations. The stock dropped as much as 17% adding to a double digit decline the day before. Since its June peak, Lucia, SK has now lost more than half its value.

[A]

That's really interesting. And because of its importance to the Korean market, there is nowhere to hide, right?

[B]

Exactly. The Kospi fell more than 10% this morning and chip related weakness also pulled Japan's Nikkei down roughly 2%. But most markets in Asia are off their lows as we speak and China is a standout with markets up roughly 1%.

[A]

All right, and Jan, the focus will remain on earnings. In fact, this is arguably the busiest week of the reporting season with a total of 177s and P500 companies due to report. Investors are particularly focused on Microsoft, Meta and Amazon. And SpaceX will also report earnings for the first time next week. The company came under massive pressure lately. Although the stock ended yesterday's trading in positive territory.

[B]

Yes, the shares have now fallen roughly 20% from their IPO price and almost 50% from the post listing peak. The stock closed higher yesterday as you said. But more than US$1.2 trillion in market value has been wiped out since the IPO. Investors are watching upcoming lockup expirations which could significantly increase the number of tradable Shares. More than 900 million shares could become tradable already Thursday with the free float expected to increase from roughly 640 million shares today to 5.33 billion by year end.

[A]

Yeah, that is substantial indeed. However, Jan, not every corporate story was negative.

[B]

No, certainly not Lucia. Coca Cola rose more than 5% after reporting better than expected results and raising its full year earnings outlook. The company pointed to resilient consumer demand across all region. Management also highlighted the FIFA World cup where hydration breaks. You probably remember that invention by the FIFA in the World cup provided additional visibility for brands such as Powerade and helped support sales.

[A]

Okay, let's move to commodities and bonds. Jan. Oil prices fell sharply after news about discussions involving Iran, Saudi Arabia and Oman regarding the Strait of Hormuz helped ease concerns. Can you tell us more about this?

[C]

Sure.

[B]

So WTI fell around 4% to below $80 per barrel. Lower oil prices also contributed to falling bond yields across regions. However, oil prices jumped overnight after U.S. central Command reported the interception of Iranian ballistic missiles. So it remains a fragile situation in the Middle East.

[A]

But that's not really benefiting Gold. The precious metal moved lower in yesterday's trading.

[B]

Yes, gold fell more than 1%. A stronger US dollar and caution ahead of the Fed rate decision later today put pressure on the metal. Silver, platinum and palladium also declined. But for gold, $4,000 seems to be a solid support, at least for now.

[A]

So you mentioned it. The Fed meeting later today is clearly the main macroeconomic event. I will about expectations in a minute, but before you go Jan, what else are investors watching today?

[B]

Without question, the Fed. Yes. Then Microsoft and Meta will report results after us close, so the focus remains on earnings, MS, Airbus and Qualcomm will also report and many more, of course. Oh, and I just see ubs booked a 17% jump in second quarter profits. That's above expectations. And they announced a 3 billion US dollar share buyback program. So enough news for a busy day. And with that, back to you, Lucia.

[A]

Great, Very interesting. Thank you very much for this nice overview.

[B]

Thanks for having me. Always a pleasure.

[A]

Now let's turn to the Fed's rate decision later today. Good morning, Dario.

[D]

Hello. Good morning, Lucia.

[A]

So last week we talked about the ecb, and this week all eyes are on the Fed. Before we discuss your expectations, what's the broader backdrop that the Fed is facing?

[D]

Yeah, I think that's quite a crucial bit here to look at before we go into the meeting. I will put it into two different dimensions. So the kind of the economic perspective and then the market side. On an economic perspective, the backdrop is basically a combination again of this renewed inflation concerns and continued economic resilience. On the inflation side, well, it's about the higher oil price. We got some good news. We heard it before from Jan over the weekend. Now again, some bad news more recently. So I mean, this was never meant to be a smooth process, unfortunately. And I think this is also one element that the Fed will be taking up. At the same time, we also have the US labor market that continues to show remarkable strength. Just look at jobless claims that we got recently falling to very quite or falling to very low levels. So that's the economy quite resilient, quite well, quite good on a good footing and definitely something where the Fed doesn't want to give up on the hawkish tilt. Also from the inflation angle, I think what's more interesting, at least for me, it's the backdrop in terms of market expectations going into this evening's decision. So the change that the possibility or the likelihood for a hike according to markets is now 30%. That's a very undecided market. If you remember, that's exactly what the Fed chair, the new Fed chair Wash, wanted. More debate, less forward guidance, and with that, more surprises at the end. So we are having here a pretty live meeting at this point in time.

[A]

Interesting. And what do you expect from today, Dario?

[D]

Well, we as a house view, we are in the camp of a hold. We believe the Fed will prefer to wait and assess how recent developments, including also the higher energy prices, really flow through the inflation picture and economic activity. For me, it also felt like the support among the FOMC for a hike is not fully here. Probably some of them are ready for a hike, but not this kind of necessary mess to really go for it already at the end. Yes, the economy remains resilient, but the labor market also doesn't look like very hot, rather balanced. And also on top of this, the last CPI reading that we had luckily removed some of this urgency for action. So in summary, I don't see enough evidence at this stage at least to justify immediate policy tightening. And after that or beyond tomorrow, we also think that the Fed should rather stay on hold, actually.

[A]

Okay, and what are the investment implications if you're right?

[D]

Well, that's quite simple. I think if the Fed stays on hold, bond yields should edge lower from current levels. That would definitely be a welcome development for fixed income investors after the rise in yields that we had over the last couple of weeks. And with that working assumption, unsurprisingly, we also wouldn't change anything on our positioning and would definitely keep some all weight duration in fixed income portfolios.

[A]

All right, thanks a lot for being with us this morning, Dario.

[D]

Thank you for inviting me, Lucia.

[A]

And just as a quick sneak peek for tomorrow's show, we'll be taking a closer look at the Fed's rate decision. So make sure to join us again. And now over to you, Mathieu. Good morning.

[C]

Good morning, Lucia.

[A]

So we are now well into the second quarter earnings season. How would you assess the results so far?

[C]

So overall the earnings season has been very strong, particularly in the US So roughly one third of the companies have now reported and around 86% have beaten earnings expectations. That's well above the long term average of 76% and kind of indicates that corporate profitability remains quite very resilient. Europe has also delivered a solid reporting season so far, broadly in line with historical averages and especially banks and semiconductor companies have been on the strong side there. So if the latest results in Consensys is Looking now at 38% of earnings growth for the S&P for Q2 year over year and at first glance you know this headline earnings growth number looks exceptionally strong. However, it's important to recognize that that the number is impacted by a large one time investment revaluation gain at Alphabet, which is kind of related to its stake in private companies. So if you exclude that effect, S and P funded earnings for the second quarter actually come down from the roughly 38% to around 26%. But even if you adjust that for this one off gain, it remains one of the strongest earnings season we've seen in recent years, highlighting that the underlying corporate backdrop continues to be very healthy.

[A]

All right, and despite these strong results, share price reactions have been rather muted. Why is that?

[C]

So that's probably one of the most interesting features of the starting season. So while companies have generally delivered strong results, investors have become much more selective in how they reward them. So historically, companies beating both earnings and revenue expectations tend to outperform the market by around 1.4 percentage points on the day of the release. But this quarter, that figure is closer to 1.2 percentage points. And then, on the other hand, companies missing expectations have been punished more severely than usual, underpowering by more than 3 percentage points. So the market reaction has become increasingly asymmetric. So good results are often no longer enough to drive meaningful upside because expectations were already very high, particularly in the technology sector. But disappointments continue to be penalized heavily. That really tells us that investors remain constructive on the fundamentals, but they're also becoming much more demanding when it comes to valuations and future growth expectations.

[A]

And Mathieu, what has been the main focus for investors during this earnings season?

[C]

So, without question, the biggest focus remains the large hyperscalers and their AI investment plans. Investors continue to ask two key questions. First, how much more will companies such as Microsoft, Meta, Amazon, and Alphabet invest in AI infrastructure? And secondly, are we starting to see clear evidence that these massive investments can generate attractive returns? And that creates a kind of delicate balancing act? On one hand, continued capital spending is positive for the broader AI ecosystem because it supports demand across semiconductors, network equipment, and also data center infrastructure. Then the other hand, even higher spending also puts pressure on free cash flow of those hyperscaler companies, meaning investors increasingly want, want proof that these investments can eventually be monetized. And Alphabet provides quite a good example here of this dynamic. The company reported very solid cloud results and raised its capital expenditure guidance. Yet if you look at the share price, it still declines because investors focus more on the higher spending than on the stronger fundamentals. So this question around AI returns remains the key theme of the reporting season.

[A]

Okay, and looking ahead, what should investors pay most attention to over the coming days?

[C]

So the biggest week of this earnings season is actually the current week, this week. So we have several of the market's most influential biggest companies reporting results. For example, Microsoft and Meta are due to report results on Wednesday, followed by Apple and Amazon on Thursday. And this would be really the focus. So the big tech companies in the U.S. so together, these companies should provide a much clearer picture of where the AI investment cycle is heading and also whether spending plans continue to accelerate or slow down from here.

[A]

Super. Thanks a lot for coming onto our show today.

[C]

Matthieu thank you Lucia. Always a pleasure.

[A]

So that is all for today then. Thanks again to my guests and thank you all for tuning in. Please join us again tomorrow when we will be back with more news moving the market. Have a great day everyone and bye for now.

[C]

The information and opinions expressed in this podcast constitute marketing material and are not the result of independent financial or investment research. Please refer to www.juliusbear.com legal podcasts for further other important legal.