Traders on the floor of the New York Stock Exchange on August 4, 2022.
Source: NYSE
Stock futures fell in overnight trading on Monday as investors waited for major corporate earnings reports and the start of the Federal Reserve’s policy meeting.
Dow Jones Industrial Average futures fell 82 points, or 0.2%, S&P 500 futures fell nearly 0.3% and Nasdaq 100 futures dropped 0.4%.
CrowdStrike shares fell more than 5% in after-hours trading after CNBC reported that Delta Air Lines had hired attorney David Boies to seek damages from CrowdStrike and Microsoft after an outage this month caused thousands of flight cancellations.
Quarterly results from Merck, Pfizer, PayPal, Procter & Gamble and JetBlue, due out before the close on Tuesday, could sway market sentiment during trading. Investors will also be keeping an eye on results from Microsoft, Advanced Micro Devices and Starbucks, due to be released at the close.
More than 40% of S&P 500 companies have reported earnings so far, and of those, 79% have beaten Wall Street expectations, according to LSEG, up from an average of 77% over the past five years.
“Consensus EPS for 2024 and 2025 are both holding up, with 2024 EPS following typical revision trends for a non-recession year, suggesting analysts are relatively comfortable with their expectations,” Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America, said in a note.
The commentary is relatively optimistic.”
The Fed’s two-day policy meeting is set to begin on Tuesday, when central bank Governor Jerome Powell is likely to signal the timing and number of rate cuts expected in the coming months. The Fed has previously projected just one rate cut for the remainder of 2024, and traders are pricing in a 100% chance of a September rate cut, according to the CME FedWatch tool.
“Inflation is trending lower, encouraging the Fed to cut rates,” said Seema Shah, chief global strategist at Principal Asset Management. “This, combined with a still-solid economic outlook and strong corporate earnings, should bolster risk assets and lead to stronger investment returns outside of the technology sector.”
On Tuesday, traders will be focused on June jobs data, due to be released at 8:30 a.m. Economists surveyed by Dow Jones expect the number of jobs to stay at 8.1 million, the same as in May. Consumer confidence for July is also due to be released.
