Stocks Set to Open Higher as Investors Await Fed Meeting, Big Tech Earnings

Oleksandr Pylypenko - Barchart - Mon Jul 24, 2023

September S&P 500 futures (ESU23) are up +0.24%, and September Nasdaq 100 E-Mini futures (NQU23) are up +0.32% this morning as investors looked ahead to the Federal Reserve’s interest rate decision while also gearing up for earnings results from some of the biggest tech heavyweights.

In Friday’s trading session, Wall Street’s major averages closed mixed, with the tech-heavy Nasdaq 100 dropping to a 1-week low. American Express Company (AXP) fell over -3% after the credit card giant reported mixed Q2 results. Also, Interpublic Group of Companies Inc (IPG) plunged more than -13% and was the top percentage loser on the benchmark S&P 500 after the advertising giant posted mixed Q2 results and cut its FY23 organic growth forecast. In addition, Schlumberger NV (SLB) dropped over -2% after the top oilfield services firm reported weaker-than-expected Q2 revenue. On the positive side, Autoliv Inc (ALV) surged over +10% after the company posted upbeat Q2 results and reaffirmed its FY23 outlook.

Second-quarter earnings season rolls on, and investors await fresh reports from major global companies this week, including Alphabet (GOOGL), Meta Platforms (META), and Microsoft (MSFT).

The U.S. Federal Reserve interest rate decision and Fed Chair Jerome Powell’s post-policy meeting press conference will take center stage in the coming week. U.S. rate futures have priced in a 99.8% probability of a 25 basis point rate increase on Wednesday.

In addition, market participants will be eyeing a spate of economic data, including the U.S. Core PCE Price Index, Employment Cost Index, Personal Income, Personal Spending, Michigan Consumer Sentiment, CB Consumer Confidence, S&P/CS HPI Composite - 20 n.s.a., Richmond Manufacturing Index, Building Permits, New Home Sales, Crude Oil Inventories, Core Durable Goods Orders, Durable Goods Orders, GDP (preliminary), Goods Trade Balance (preliminary), Initial Jobless Claims, and Pending Home Sales.

Today, all eyes are focused on the U.S. S&P Global Composite PMI preliminary reading in a couple of hours. Economists, on average, forecast that the July S&P Global Composite PMI will stand at 53.1, compared to the previous value of 53.2.

Also, investors are likely to focus on the U.S. S&P Global Manufacturing PMI, which came in at 46.3 in June. Economists foresee the new figure to be 46.4.

U.S. S&P Global Services PMI preliminary reading will be reported today as well. Economists foresee this figure to stand at 54.0 in July, compared to the previous number of 54.4.

In the bond markets, United States 10-Year rates are at 3.812%, down -0.70%.

The Euro Stoxx 50 futures are down -0.27% this morning as investors prepared for the busiest week of the earnings season and a sequence of central bank policy meetings. Losses in consumer staples and retail stocks are leading the overall market lower. Data released on Monday indicated that the downturn in Eurozone business activity deepened much more than expected in July as the demand in the region’s dominant services industry declined, and factory output experienced its fastest fall since the onset of the COVID-19 pandemic. Meanwhile, the European Central Bank is set to declare its interest rate decision on Thursday, and it is broadly anticipated to increase interest rates by another 25 basis points. In corporate news, Ryanair Holdings Plc (RYA.I.DX) slid over -4% after the company lowered its full-year traffic prediction and indicated the possibility of reducing ticket prices to fill seats during the winter, citing passengers’ increased cost sensitivity. At the same time, Vodafone Group Plc (VOD.LN) rose more than +4% after the company reported Q1 service revenue growth that topped analysts’ expectations.

France’s Manufacturing PMI (preliminary), France’s Composite PMI (preliminary), France’s Services PMI (preliminary), Germany’s Composite PMI (preliminary), Germany’s Manufacturing PMI (preliminary), Germany’s Services PMI (preliminary), Eurozone’s Composite PMI (preliminary), Eurozone’s Manufacturing PMI (preliminary), Eurozone’s Services PMI (preliminary), U.K.’s Composite PMI (preliminary), U.K.’s Manufacturing PMI (preliminary), U.K.’s Services PMI (preliminary) data were released today.

The French July Manufacturing PMI stood at 44.5, weaker than expectations of 46.0.

The French July Composite PMI came in at 46.6, weaker than expectations of 47.8.

The French July Services PMI was at 47.4, weaker than expectations of 48.4.

The German July Composite PMI arrived at 48.3, weaker than expectations of 50.3.

The German July Manufacturing PMI came in at 38.8, weaker than expectations of 41.0.

The German July Services PMI stood at 52.0, weaker than expectations of 53.1.

Eurozone July S&P Global Composite PMI has been reported at 48.9, weaker than expectations of 49.7.

Eurozone July Manufacturing PMI arrived at 42.7, weaker than expectations of 43.5.

Eurozone July Services PMI came in at 51.1, weaker than expectations of 51.5.

U.K. July Composite PMI stood at 50.7, weaker than expectations of 52.4.

U.K. July Manufacturing PMI has been reported at 45.0, weaker than expectations of 46.1.

U.K. July Services PMI was at 51.5, weaker than expectations of 53.0.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.11%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.23%.

China’s Shanghai Composite today closed slightly lower as worries surrounding the property market sparked a new wave of selling in the country while investors awaited signals of further policy support. Chinese property stocks listed in Hong Kong plunged to about 8-month lows on Monday as concerns over a debt crunch in the sector resurfaced, with Country Garden Holdings Company Ltd tumbling more than -8%. Consumer staples stocks also lost ground. On the positive side, computer and AI-related stocks advanced, with Inspur Electronic Information Industry climbing over +8% and WUS Printed Circuit rising more than +6%. Investor focus is now squarely on the upcoming July Politburo meeting, which is expected to convene at the end of this week.

At the same time, Japan’s Nikkei 225 Stock Index closed higher today as investors scaled back expectations for a hawkish policy adjustment from the Bank of Japan this week, and strong quarterly earnings results further bolstered sentiment. Reuters reported on Friday that Bank of Japan officials believe there is currently no pressing need to address the side effects of its yield curve control program. Meanwhile, automobile stocks outperformed on Monday, buoyed by an about +5% rise in Mitsubishi Motors Corp after the carmaker reported stronger-than-expected quarterly results. Chip-related stocks also gained ground, with Tokyo Electron and Advantest rising more than +2%. In other corporate news, Tokyo Steel Manufacturing Co Ltd surged over +21% after the steelmaker posted better-than-expected earnings for the April-June quarter. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 1% to 19.81.

Pre-Market U.S. Stock Movers

AMC Entertainment Holdings Inc (AMC) surged over +46% in pre-market trading following a judge’s decision to block the theater chain’s stock conversion plan, which posed a risk of diluting investors’ holdings in the company. CEO Adam Aron announced on Sunday that the company filed a revised petition for a stock conversion plan to address the Delaware court’s concerns related to other shareholders.

Tesla Inc (TSLA) slid about -1% in pre-market trading after UBS downgraded the stock to Neutral from Buy.

Becton Dickinson and Company (BDX) climbed more than +5% in pre-market trading after receiving 510(k) clearance from the U.S. FDA for its updated Alaris Infusion System.

Amylyx Pharmaceuticals Inc (AMLX) gained over +4% in pre-market trading after Goldman Sachs upgraded the stock to Buy from Neutral.

Q2 Holdings (QTWO) rose more than +2% in pre-market trading after Baird upgraded the stock to Outperform from Neutral.

Gilead Sciences Inc (GILD) fell over -2% in pre-market trading after the company decided to discontinue a phase 3 study of magrolimab for higher-risk myelodysplastic syndromes due to futility.

Omnicom Group Inc (OMC) dropped about -1% in pre-market trading after Wells Fargo downgraded the stock to Equal Weight from Overweight.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Monday - July 24th

Cadence Design (CDNS), NXP (NXPI), Alexandria RE (ARE), Brown&Brown (BRO), Domino’s Pizza Inc (DPZ), Domino’s Pizza Inc (DPZ), Packaging America (PKG), Crown (CCK), GAP ADR (PAC), F5 Networks (FFIV), Grupo Aeroportuario Sureste ADR (ASR), Cleveland-Cliffs (CLF), Whirlpool (WHR), Medpace Holdings (MEDP), Range Resources (RRC), Simpson Manufacturing (SSD), Hexcel (HXL), RLI (RLI), AGNC Invest (AGNC), Zurn Water Solutions (ZWS), Cadence Bancorp (CADE), ChampionX Corp (CHX), NorthWestern (NWE), Cathay (CATY), WSFS (WSFS), Bank of Hawaii (BOH), Agilysys (AGYS), Independent Bank Group (IBTX), Enterprise Financial (EFSC), Hope Bancorp (HOPE), Nextgen Healthcare (NXGN), KKR Real Estate (KREF), HealthStream (HSTM), Dynex Capital (DX).

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On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.