U.S. stock futures rose on Monday as the dollar fell and Treasury yields held steady as investors braced for what could be the biggest week of the trading year, capped by a crucial Federal Reserve interest rate decision.
With global equities dulled by the prospect of a recession and activity data in some of the world’s largest economies pointing to a continued slowdown, investors have been reluctant to embrace risky markets for much of the past few weeks. That said, U.S. equities posted a surprisingly strong performance during the month of July – with a 4.66% gain for the S&P 500 – after the worst start to the first half in more than fifty years.
However, U.S. corporate earnings have so far failed to provide near-term support for a sustained market recovery, and with the 106 S&P 500 companies reporting so far this season, only Around 75.5% exceeded Street’s forecast, compared to the recent four. – quarterly average of 80.6%.
About 172 S&P 500 companies will release their June quarter results this week, highlighted by the market’s four largest stocks: Apple (AAPL) – Get the Apple Inc. report.Amazon (AMZN) – Get the report from Amazon.com Inc.Google (GOOGL) – Get the Alphabet Inc. report. and meta-platforms (META) – Get the report from Meta Platforms Inc..
Second-quarter earnings are expected to rise about 6.2% from a year ago to $467.2 billion on a stock-weighted basis, but that pace is largely the result of record industry profits. ‘energy. Removing that contribution, revenue is down 3.2% from a year ago, according to data from Refinitiv.
Activity data is also beginning to wilt under pressure from the Fed’s inflation fight, with S&P Global’s closely-tracked PMI for the services sector – the mainstay of US economic growth – falling. below the 50 point mark that separates growth from contraction for the first time in two years this month.
Treasury Secretary Janet Yellen told NBC’s “Meet The Press” on Sunday that the economy is not in a recession – although it has likely contracted for two straight quarters – but rather “in a period of transition in which growth slows down and that is necessary and appropriate.”
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However, bond markets are not showing the same optimism, with the US Treasury yield curve remaining deeply inverted as growth slows and inflation continues to test multi-decade highs. Yields on the benchmark 2-year notes were last seen at 3.001% and the 10-year notes at 2.796% in overnight trades.
The US dollar index, which tracks the greenback against a basket of six global currencies and often moves in the opposite direction to stock prices, was down 0.42% on the session at 106.282.
CME Group’s FedWatch suggests a firm 77.5% probability of a 75 basis point rate hike on Wednesday, a move that would take the Fed’s key rate to a range between 2.25% and 2.5 %, but with bets on a smaller follow-up move in September outweighing those on larger moves, suggesting the Fed is starting to worry about their impact on growth and jobs in the larger economy of the world.
US stocks are holding up this morning despite a mixed session overnight, with European stocks advancing against a closely watched index of trading conditions in Germany, the region’s largest economy, which fell to a two-year low this this month.
The region-wide Stoxx 600 gained 0.26% at midday in Frankfurt, following a 0.28% decline in the MSCI ex-Japan index in Asia.
On Wall Street, futures tied to the S&P 500 point to an opening bell gain of 23 points while those tied to the Dow Jones Industrial Average are priced for an upside move of 180 points. Technology-focused Nasdaq-linked futures are pointing up 70 points.
In terms of individual stocks, Tesla (TSLA) – Get the report from Tesla Inc. The shares were the most active in premarket trading, rising 1.32% following an SEC filing showing the automaker posted a $170 million loss on its bitcoin holdings. during the first six months of the year.
Boeing (BA) – Get the Boeing Company Report shares were also slightly lower following a weekend vote by some 2,500 union members to strike at three St. Louis-area factories starting Aug. 1.