Investors await second-quarter earnings results from Pinterest, Activsion Blizzard, Starbucks, Caterpillar and more for more signs of whether the Fed’s inflation battle is working.
U.S. stock-index futures were flat to lower ahead of the first trading day of August after Wall Street finished its best month since 2020 amid ongoing uncertainty about the direction of the economy and whether earnings will continue to beat expectations amid still-rampant inflation and rising interest rates.
On Wall Street, futures tied to the S&P 500 are indicating a 10.75-point opening bell drop while those liked to the Dow Jones Industrial Average are priced for a 42 point decline. Futures linked to the tech-focused Nasdaq are indicating a 32.5-point drop.
On Friday, the Dow Jones Industrial Average gained 315.50 points, or 1%, to close at 32,845.13, notching a third straight day of gains; the S&P 500 climbed 57.86 points, or 1.4%, to 4,130.29, rising for a third consecutive day; and the Nasdaq Composite rose 228.09 points, or 1.9%, to end at 12,390.69, its third straight day of gains.
For the week, the Dow gained 3%, the S&P 500 rose 4.3% and the tech-heavy Nasdaq advanced 4.7%. For July, the Dow advanced 6.7%, the S&P 500 jumped 9.1% and the Nasdaq surged 12.3%, according to Dow Jones Market Data. It was the best monthly results for the Dow and S&P 500 since November 2020, and the Nasdaq’s best month since April 2020.
Investors are paring bets on another jumbo Fed rate hike in September, with the CME Group’s FedWatch suggesting a near 80% chance of a 50-basis-point increase following last week’s grim assessment of first-quarter growth. The Fed last month opted for another 75-basis-point rate hike in an effort to tamp down inflation.
Treasury bond yields, meantime, were up slightly, with the 10-year benchmark Treasury trading up 0.02% at 2.661%. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.43% lower at 105.909.
Investors will be looking at a fresh round of second-quarter earnings reports this week, starting with Pinterest (PINS) – Get Pinterest Inc. Class A Report, Activision Blizzard (ATVI) – Get Activision Blizzard Inc Report, Avis Budget (CAR) – Get Avis Budget Group Inc. Report and more on Monday, followed by earnings from Starbucks (SBUX) – Get Starbucks Corporation Report, Caterpillar (CAT) – Get Caterpillar Inc. Report, JetBlue Airways (JBLU) – Get JetBlue Airways Corporation Report, Uber (UBER) – Get Uber Technologies Inc. Report, PayPal (PYPL) – Get PayPal Holdings Inc. Report, AMD (AMD) – Get Advanced Micro Devices Inc. Report and Airbnb (ABNB) – Get Airbnb Inc. Report on Tuesday.
CVS Health (CVS) – Get CVS Health Corporation Report, Yum Brands (YUM) – Get Yum! Brands Inc. Report, MGM Resorts (MGM) – Get MGM Resorts International Report and eBay (EBAY) – Get eBay Inc. Report on Wednesday, Alibaba (BABAF) , Eli Lilly (LLY) – Get Eli Lilly and Company Report, Warner Bros. Discovery (WBD) – Get Warner Bros. Discovery Inc. Report, Amgen (AMGN) – Get Amgen Inc. Report and Block (SQ) – Get Block Inc. Class A Report on Thursday, and AMC Networks (AMCX) – Get AMC Networks Inc. Report and DraftKings (DKNG) – Get DraftKings Inc. Report on Friday.
In addition, the Friday nonfarm payrolls report from the Bureau of Labor Statistics will give more insight into the strong labor market. So far this year, the solid growth of jobs has prompted economists to say the U.S. is not technically in recession, even with two consecutive quarters of negative GDP.
Apple (AAPL) – Get Apple Inc. Report shares finished 3.3% on Friday higher after the world’s most-valuable tech company topped Street earnings forecasts, noting the anticipated supply chain hit was lighter than it had forecast while China sales held up despite the country’s spring Covid lockdown. Apple shares were down 0.28% at $162.06 at last check.
Amazon (AMZN) – Get Amazon.com Inc. Report, meanwhile, surged 10.4% after its better-than-expected second quarter sales of around $119 billion, and easing cost pressures, softened the impact of the online retail giant’s second consecutive quarterly loss. Amazon shares were down 0.17% at $134.72.
In premarket trading on Monday, Target (TGT) – Get Target Corporation Report shares traded higher after Wells Fargo upgraded the stock to overweight from equal weight, saying the recent pullback was a good buying opportunity. Target shares are down 29% so far this year amid inflation curbing consumer spending and lingering supply chain issues.
Alibaba’s (BABAF) American depositary receipts, meantime, were up 1.66% at $90.85 after the Chinese e-commerce giant said it planned to work with regulators to keep its listings in New York and Hong Kong.