Traders work on the floor of the New York Stock Exchange during afternoon trading on January 22, 2024 in New York City. The Dow Jones and S&P both hit all time highs with the Dow Jones closing over 38,000 points for the first time ever as stocks continue to rise.
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U.S. stock futures were little changed Monday as Wall Street looked toward several mega-cap tech earnings reports and the Federal Reserve’s rate policy decision.
Futures tied to the Dow Jones Industrial Average declined 27 points, or 0.1%. S&P 500 and Nasdaq 100 futures rose slightly.
The three major averages all rose last week week following encouraging economic data. Economic growth in the fourth quarter was stronger than expected, while core inflation on a yearly basis was lower than economists had expected, suggesting a cooldown in price increases. However, the market’s gains were more muted compared to the prior week’s rally after notable companies such as 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 — part of the core group of big tech companies that have led this year’s rally — 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 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% probability the Fed will not cut rates at the upcoming meeting, according to the CME Group.
Sonu Varghese, global macro strategist at Carson Group, said “the Fed doesn’t 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’re overweight equities.”
To be sure, he added that while the Fed will likely reduce rates later this year, “and maybe lead to some capital appreciation, [it will] probably not be as much as the market is expecting.”
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