Futures tied to the Dow Jones Industrial Average dropped 86 points, or 0.2%, while S&P 500 and Nasdaq 100 futures were down 0.2% and 0.3%, respectively
U.S. stock futures dropped across the board Sunday night as Wall Street looked toward several mega-cap tech earnings reports and the Fed’s rate policy decision.
Futures tied to the Dow Jones Industrial Average dropped 86 points, or 0.2%. S&P 500 and Nasdaq 100 futures were down 0.2% and 0.3%, respectively.
The three major averages all gained during the previous trading week after encouraging economic data. Economic growth in Q4 was stronger than expected, while core inflation on a yearly basis was lower than economists had expected, indicating a cooldown in price increases. However, the market’s gains were more muted compared to the prior week’s rally after tech giants like Intel and Tesla disappointed on the earnings front.
This week marks the busiest week of the earnings season, with 19% of the S&P 500 reporting earnings. Mega-cap tech names Microsoft, Apple, Meta, Amazon and Alphabet will be posting their results. Investors will also keep an eye on several Dow components reporting their quarterly earnings, including Boeing and Merck.
Meanwhile, the Federal Open Market Committee (FOMC) will begin its two-day policy meeting on Tuesday. Investors are nearly certain the central bank will keep rates steady. Traders in the fed funds futures market assigned an almost 97% chance the Fed will not cut rates at the upcoming meeting, as per the CME Group.
Sonu Varghese, global macro strategist at Carson Group, believes “the Federal Reserve does not really have to worry about a hot economy stoking inflation anymore, because we literally see the opposite. The economy is running above trend and inflation is coming down. Based on that, in terms of portfolio allocation, we are overweight equities.”
To be sure, he added that while the Federal Reserve will likely lower rates later this year, and maybe lead to some capital appreciation, it will probably not be as much as the market is expecting.
