Markets expect big rate cuts over the next 12 months
34 minutes ago
Financial markets expect the Federal Reserve to cut interest rates as sharply over the next year as it typically does during an economic downturn, but market predictions about interest rates rarely come true.
According to CME Group’s FedWatch tool, which predicts interest rate movements based on data from federal funds futures contracts, the Fed is likely to cut the benchmark federal funds rate by 1.75 percentage points from current levels between now and September 2025.
Federal Reserve Chairman Jerome Powell attends a Washington Economic Club event in Washington, DC, on July 15, 2024.
Tierney L. Cross/Bloomberg via Getty Images
The only time the Fed has cut interest rates this quickly before is to combat a severe economic downturn — the last time it did so was during the Great Recession.
Markets widely expect the Fed to begin lowering interest rates from current levels in September. The big question for policymakers and markets is how fast the Fed will cut rates after that. In the last poll, conducted in June, Fed officials projected interest rates would be lowered to a range of 4% to 4.25% by the end of 2025, down from the current 5.25% to 5.5%.2
That represents just a 1.25 percentage point cut in 18 months, far less than markets had expected.
Markets have a poor track record of predicting the Fed’s actions over long periods of time: Traders have often bet on big rate cuts in the past, only for those hopes to be dashed and for the Fed to adopt a more cautious stance.
-Deacon Hyatt
Philips shares surge on sales growth despite weakness in China
1 hour 39 minutes ago
Koninklijke Philips (PHG) shares soared on Monday after the company reported second-quarter results in which same-store sales rose year over year as strong demand in the rest of the world offset a sales decline in China.
The Dutch conglomerate reported total sales of 4.46 billion euros ($4.82 billion), in line with analysts’ expectations compiled by Visible Alpha. Philips posted net profit of 452 million euros, slightly below analysts’ expectations of 460.4 million euros.
Same-store sales rose 2 percent, and Philips said China remained a “fundamentally attractive growth market” despite weaker second-quarter sales.
The company also confirmed its full-year outlook, while “acknowledging that uncertainties remain.” Philips now expects same-store sales to grow 3-5 percent and free cash flow to be between 900 million and 1.1 billion euros.
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Philips shares rose 13 percent to $29.17 on Monday afternoon, trading at their highest price in more than two years.
-Aaron McDaid
What levels should 3M be watching after Friday’s 23% surge?
2 hours 59 minutes ago
Shares of 3M Co., maker of Scotch Tape and Post-it notes, rose 23 percent on Friday, its biggest one-day gain on record, after the company reported better-than-expected quarterly results and raised its full-year profit outlook.
The stock broke out of a pennant pattern in weekly trading volume for the first time since early March, signaling a continuation of the current uptrend.
Source: TradingView.com.
As the stock continues to move higher, 3M shares could encounter resistance at key levels on the charts: $128, $152, and $175.
If shares decline, a pullback to the $106 region is possible, which would likely attract buying interest near the point where shares first broke out and the March 2020 pandemic lows.
Read the full technical analysis here.
3M shares were down about 1.7% in recent trading on Monday.
-Timothy Smith
OnSemi soars with better-than-expected results
3 hours 46 minutes ago
Shares of ON Semiconductor (ON) soared on Monday after the company reported better-than-expected earnings and highlighted growth in the auto industry.
The company reported second-quarter revenue of $1.74 billion, down from a year ago but beating analysts’ expectations. Net income per share was 78 cents, down from a year ago and below expectations, but excluding one-time items, it was 96 cents per share, beating expectations.
“ON Semiconductor, which makes chips and sensors for the automotive and industrial markets, is strengthening its silicon carbide leadership position in the automotive sector with production expansions with major global (automakers) in Europe, North America and China,” CEO Hassan El Khoury said.
ON Semiconductor recently announced a multi-year deal with Volkswagen (VWAGY) to supply chips for the automaker’s electric vehicles.
The company provided guidance for the next quarter that was in line with analysts’ expectations.
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ON Semiconductor shares rose 12% in recent trading, leading the way in gainers on the S&P 500 and Nasdaq Composite indexes.
-Naomi Buchanan
How Big Tech Earnings Will Affect Markets This Week
5 hours 16 minutes ago
Stock markets have been volatile in recent weeks and could see further volatility this week as most of the Magnificent Seven report earnings at a key milestone for the group.
Bank of America expects more than a third of S&P 500 companies’ combined earnings to be released this week.
That’s mainly because Microsoft (MSFT) reports earnings on Tuesday afternoon, Meta (META) reports after the market closes on Wednesday, and Apple (AAPL) and Amazon (AMZN) are both scheduled to report after the close on Thursday. These four companies make up about 20% of the S&P 500, roughly the same as the healthcare and industrial sectors combined.
Alice Morgan / Investopedia
Big moves in these stocks will likely drag down the major stock indexes as well.The market may be on edge heading into earnings reports this week after earnings reports from Tesla (TSLA) and Alphabet (GOOGL) sent tech stocks soaring last week, leading the sector into a correction and helping the S&P 500 post its worst day since December 2022.
Weak earnings performance from big tech companies this week could widen the fissures that began appearing last week and also add to or challenge the debate over spending on artificial intelligence, or AI, which has weighed on sentiment recently.
-Colin Laidley
Major stock indexes expected to rise on Monday
6 hours 33 minutes ago
Futures tracking the Dow Jones Industrial Average rose 0.5%.
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S&P 500 futures rose 0.6%.
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Nasdaq 100 futures rose 0.9%.
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