U.S. stock index futures dipped on Tuesday, with investors eyeing the upcoming earnings reports from Big Tech heavyweights. This scrutiny will test whether the recent rally in the business market is built on solid ground.
After a three-day slide, the S&P 500 and Nasdaq bounced back on Monday, recording their largest one-day gains in over a month. This resurgence saw investors returning to megacap growth stocks.
The market’s recent volatility has been marked by a shift away from Big Tech towards underperforming sectors. The forthcoming results from tech giants will be crucial in assessing if U.S. stocks are overvalued or poised for further growth.
Alphabet and Tesla, members of the so-called “Magnificent Seven,” are slated to report their quarterly earnings after the market close. In premarket trading, both stocks edged up by about 0.3%, amidst a mixed session for this elite group.
Nvidia, a leading AI chipmaker, saw its shares drop 0.8% after posting its steepest one-day gain in almost a month on Monday.
The focus on quarterly earnings comes as U.S. President Joe Biden announced his decision to withdraw from the reelection campaign, with Vice President Kamala Harris now the presumptive Democratic nominee. This political shift adds another layer of uncertainty as markets look to corporate earnings for insights into economic resilience amid high interest rates.
Before the bell, several major companies, including General Motors, United Parcel Service, Coca-Cola, and Philip Morris International, are expected to release their earnings.
So far this earnings season, 81.1% of the 74 S&P 500 companies that have reported have surpassed expectations, according to LSEG data.
This week’s economic data, particularly the personal consumption expenditures (PCE) price index— the Federal Reserve’s preferred inflation measure—will be critical in shaping the monetary policy outlook, amidst a backdrop of easing inflation and a cooling labor market.
Expectations for a 25-basis point interest rate cut by September have surged to nearly 92%, up from about 60% last month, according to the CME’s FedWatch Tool. Predictions also indicate two rate cuts by the end of the year.
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