Stock Market

U.S. stock futures hold near five-week highs as investors await earnings wave and Fed decision – News Opener

U.S. stock futures were a touch firmer on Monday as traders contemplated a week stuffed with monster earnings and Fed action.

How are stock-index futures trading
  • S&P 500 futures
    ES00,
    +0.52%

    rose 16 points, or 0.4%, to 3981

  • Dow Jones Industrial Average futures
    YM00,
    +0.52%

    added 116 points, or 0.4%, to 31991

  • Nasdaq 100 futures
    NQ00,
    +0.50%

    gained 57 points, or 0.5%, to 12480

On Friday, the Dow Jones Industrial Average
DJIA,
-0.43%

fell 138 points, or 0.43%, to 31899, the S&P 500
SPX,
-0.93%

declined 37 points, or 0.93%, to 3962, and the Nasdaq Composite
COMP,
-1.87%

fell 226 points, or 1.87%, to 11834.

The Russell 2000 index
RUT,
-1.62%

of small cap stocks is up 5.8% so far in July.

What’s driving markets

Traders were positive early on Monday, though appeared reluctant to build bold positions before a big batch of corporate earnings that could shape market sentiment in the short term.

For the new week there will be 175 S&P 500 companies reporting, including big beasts like Apple
AAPL,
-0.81%
,
Alphabet
GOOGL,
-5.63%
,
Microsoft
MSFT,
-1.69%

and Amazon
AMZN,
-1.77%
,
though the action doesn’t pick up again until Tuesday.

The S&P 500 is down 16.9% for the year to date but has climbed 8% from its 52-week low hit in mid-June, with sentiment underpinned of late by a corporate reporting season that has proved better than some had feared.

“Earnings season has been mixed, but boring is beautiful,” said Stephen Innes, managing partner at SPI Asset Management.

With 21% of S&P 500 companies having reported, the second quarter blended earnings growth rate for the benchmark index is 4.8%, according to John Butters, senior earnings analysts at FactSet.

“If 4.8% is the actual growth rate for the quarter, it will mark the lowest earnings growth rate reported by the index since Q4 2020 (4.0%),” said Butters. However, “68% of S&P 500 companies have reported a positive EPS surprise and 65% of S&P 500 companies have reported a positive revenue surprise,” he added.

The market’s forward 12-month P/E ratio is 16.7, below the 10-year average of 17.0, according to FactSet, a pullback that is supporting valuations.

The looming Federal Reserve rate decision on Wednesday provided another reason for caution. The central bank is expected to raise borrowing costs by 75 basis points to a range of 2.25% to 2.50%, but investors will be keen to hear about how the Fed sees the pace of future hikes.

Ahead of the Fed, the 10-year Treasury yield
TMUBMUSD10Y,
2.814%

is up 3 basis points to 2.783% and ICE Dollar index
DXY,
-0.44%

is barely changed at 106.70.

It’s a thin start to the week for economic data. The Chicago Fed national activity index for June will be released at 8.30 a.m. Eastern.

How are other assets faring
  • U.S. crude futures
    CL.1,
    +1.02%

    rose 1.3% to $95.91 a barrel, having at one point touched a five-month low around $91, as traders worried about slowing demand as economies sputter.

  • Bitcoin
    BTCUSD,
    -3.31%

    fell 3.3% to $21,997 and gold
    GC00,
    +0.10%

    climbed 0.2% to $1,732 an ounce.

  • Asian markets were softer after taking the lead from Wall Street’s Friday pullback. Hong Kong’s Hang Seng
    HSI,
    -0.22%

    fell 0.2%, the Shanghai Composite
    SHCOMP,
    -0.60%

    lost 0.6% and Japan’s Nikkei 225
    NIK,
    -0.77%

    slipped 0.8%. In Europe, the Stoxx 600
    SXXP,
    +0.26%

    advanced 0.2% as U.S. futures picked up.

  • Wheat futures
    W00,
    +2.93%

    are up 3.7% to $7.87 a bushel after Russia agreed a deal with Ukraine to export grain and then targeted the port of Odessa with missiles.

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