Ahead of the market opening: Wall Street shifts to declines and the earnings season continues

The trading day opens with the continuation of the bank earnings week, and against the backdrop of stabilization on Wall Street after last week's strong rally. Let's start at home.

The stock exchange closed yesterday with declines. Tel Aviv 35 fell 0.3% and Tel Aviv 125 retreated 0.7%, while the banks - which are supposed to be the stars of the week - weighed down: the index fell 2%, Leumi lost 2.1% and Hapoalim 2.3%. It is possible that this is profit-taking before the reports, after the strong rally in July.

Next Vision stood out particularly negatively, plunging 6.7% - and this is a perfect example of market psychology during earnings season. The company more than doubled its revenue and profit, and raised its annual target - and yet the stock fell. The reason: apparently the expectations were even higher, and the stock had already priced in the success. Again, the market trades on expectations, not just the numbers.

On the other hand, Tower jumped 9.6% contrary to the local trend, on the back of the strengthening in Nasdaq.

In this context, in an interview with ice, Chen Golan, chairman and co-founder of Next Vision, emphasized that the company continues to grow at an impressive rate, that the demand for its stabilization cameras - used mainly in unmanned aerial vehicles - is particularly strong against the backdrop of growing interest in the defense sector and drones worldwide, and that the raising of the annual target reflects confidence in the future.

In New York, the trend was slightly negative, after the winning week. The S&P 500 fell 0.1%, the Nasdaq 0.3%. The main factor: Nvidia fell about 3% after a report that it is working with Apollo and Blackstone on a huge financing package of 500 billion dollars for AI infrastructure - which brought back the fear of "circular financing" that had already pressured the stock in the past. Intel fell after announcing a share issuance to raise 15 billion dollars. Oil returned to rise (Brent above 87 dollars) against the backdrop of uncertainty surrounding the opening of the Strait of Hormuz.

Today the local earnings week continues, with reports from banks and large companies. The main event tomorrow: the US Consumer Price Index. After the weak employment report that pushed away the interest rate fear, the index will give another hint - a moderate index will strengthen the expectation that the Fed will leave the interest rate unchanged, while a high index may bring back the fear, especially in light of the expensive oil.

The opening today depends on the reaction to the reports and the direction of Wall Street. For the Israeli saver, the story of Next Vision yesterday is an important lesson: a strong report does not guarantee that the stock will rise, if the expectations have already run ahead. This is also true for the banks - after they jumped in July, the bar is high, and it is possible that we will see negative reactions in the market even to good reports.