Wall Street Looks To Ride On Earnings Cheer As Meta Q2 Impresses Investors: Analyst Says Economic Data, Stock Performances Suggest Republican Win In November

After Wednesday’s tech-led rebound amid the Federal Reserve’s rate decision, the stock market could be in for further gains. The major index futures point to a higher opening, although suggesting a slowdown in the upward momentum is in the cards. Despite Federal Reserve Chair Jerome Powell’s non-committal stance, the market has begun discounting a September rate cut. This is evident from the extended pullback in bond yields and the rally in dollar-denominated commodities. The imminent release of the July non-farm payrolls report could introduce some caution.

The market could receive support from positive reactions to Meta Platforms, Inc.‘s META earnings even as it may choose to remain on “wait-and-watch” mode ahead of another batch of mega-cap tech earnings from the likes of Amazon, Inc. AMZN, Apple, Inc. AAPL and Intel Corp. INTC.

Futures	Performance (+/-)
Nasdaq 100	+0.34%
S&P 500	+0.33%
Dow	+0.15%
R2K	-0.35%

In premarket trading on Thursday, the SPDR S&P 500 ETF Trust SPY moved up 0.31% to $547.16, and the Invesco QQQ ETF QQQ rose 0.48% to $473.35, according to Benzinga Pro data.

Cues From Last Session:

U.S. stocks closed Wednesday’s session higher, with the S&P 500 and the Nasdaq Composite rising solidly amid positive reaction to tech earnings. The Dow Jones Industrials Averages saw some moments of anxiety but stayed mostly in the green before closing modestly higher. All three averages experienced some degree of volatility amid the Fed decision, rising sharply following the release of the post-meeting policy statement. They gave back much of these gains after Powell’s presser and yet closed firmly in the green.

As expected, the central bank used the July meeting to prepare the markets for a September rate cut, said Jeffrey Roach, chief economist at LPL Financial. The rate-setting committee noted a slowdown in the labor market and said Inflation continued to move into better balance.

Weighing in on Powell’s press conference,  Chris Zaccarelli, Chief Investment Officer at Independent Advisor Alliance, said the chairman tried to strike a neutral tone. Powell explained “why today was too soon to cut rates, but effectively said that his base case was for a 25 bps rate cut even while leaving open the possibility that they may be forced to wait again (e.g. zero cuts) or even that they would move even more quickly (e.g. several cuts),” he said.

IT stocks rallied strong and hard, while communication services, consumer discretionary, industrial, material and utility stocks also gained ground.

Index	Performance (+/-)	Value
Nasdaq Composite	+2.64%	17,599.40
S&P 500 Index	+1.58%	5,522.30
Dow Industrials	+0.24%	40,842.79
Russell 2000	+0.51%	2,254.48

Insights From Analysts:

Monica Guerra, Head of Policy, Morgan Stanley Wealth Management, said analysis of several key economic indicators suggests the Republican candidate may still have an edge in the November election. “Recent economic cooling may be a disadvantage for Democrats, with slower annualized first-quarter GDP growth of 1.3%, down from 3.4% in 2023's fourth quarter, corresponding to a 1.4% drop in the president's approval rating this year,” she said.

Still elevated prices and interest rates, which will likely remain high by historical standards even after the Fed cut rates, may not bode well for the Democratic nominee, she added

Guerra said the performances of different equity sectors also point to a Republican win. She noted that her team experimented with two equity baskets each containing 12 sectors and industry ETFs that could benefit from a Democratic or Republican win. “So far this year, the Republican basket (which includes sectors such as Energy, Materials, Utilities and Real Estate) has outperformed by 9% the Democratic basket (including solar energy, tech and infrastructure stocks). This suggests growing investor confidence in a GOP victory,” she said.

Upcoming Economic Data:

• The Labor Department is due to release the weekly jobless claims report at 8:30 a.m. EDT. Economists, on average, expect the number of individuals claiming unemployment benefits to come in at 235,000 in the week ended July 27, flat with the number for the previous reporting week.
• The S&P Global will release the final July manufacturing purchasing managers’ index at 9:45 a.m. EDT. Flash reading released in July showed a reading of 49.5, suggesting contracting activity, down from 51.6 in June.
• The Institute for Supply Management is due to release the results of its national manufacturing survey at 10 a.m. EDT. The manufacturing PMI for July is expected at 48.9, slightly up from 48.5 in June.
• The Commerce Department’s construction spending report, due at 10 a.m. EDT, is expected to show a 0.2% month-over-month increase following a 0.1% drop in May.
• The Treasury will auction four- and eight-week bills at 11:30 a.m. EDT.

See also: Best Futures Trading Software

Stocks In Focus:

• Arm Holdings plc ARM fell over 10% in premarket trading following the chipmaker’s quarterly results.
• The other stocks reacting to earnings are C.H. Robinson Worldwide, Inc. CHRW (up over 11.5%), Carvana Co. CVNA (up over 13.50%), Meta (up over 6.6%), and Teladoc Health, Inc. TDOC (down about 17%).
• Anheuser-Busch InBev SA/NV BUD, Bausch Health Companies Inc. BHC, Biogen Inc. BIIB, ConocoPhillips COP, Dominion Energy, Inc. D, EVgo, Inc. EVGO, Hershey Company HSY, Hertz Global Holdings, Inc. HTZ, Mobileye Global Inc. MBLY, Regeneron Pharmaceuticals, Inc. REGN, Sirius XM Holdings Inc. SIRI, Cigna Group CI and Wayfair Inc. W are among the key companies due to release their earnings reports ahead of the market opening.
• Those reporting after the close include Amazon, Apple, Beazer Homes USA, Inc. BZH, BigBear.ai Holdings, Inc. BBAI, Block, Inc. SQ, Booking Holdings Inc. BKNG, Cloudflare, Inc. NET, Clorox Company CLX, Coinbase Global, Inc. COIN, DraftKings Inc. DKNG, Intel Corporation INTC, Microchip Technology Incorporated MCHP, MicroStrategy Incorporated MSTR, Opendoor Technologies Inc. OPEN, RingCentral, Inc. RNG, Roku, Inc. ROKU, Vertex Pharmaceuticals Incorporated VRTX, Twilio Inc. TWLO and United States Steel Corporation X.

Commodities, Bonds And Global Equity Markets:

Crude oil and gold futures extended gains and the yield on the 10-year Treasury note slipped 5.5 points 4.049%. Bitcoin BTC/USD pulled back below the $65K level.

Asian stocks closed on a mixed note, with the Japanese market retreating sharply on the yen’s strength post the Bank of Japan’s rate decision. The Chinese and Hong Kong markets fell modestly after disappointing Chinese manufacturing data. The rest of the major markets in the region rose, towing in line with the sentiment on Wall Street overnight.

The European markets were mostly lower in early trading as traders await the Bank of England’s rate decision due shortly.

Read Next:

• Apple, Amazon, Microsoft, Meta Lead The Charge As Investors Bank On Tech Cheer For Rally’s Reacceleration: Week Ahead In Earnings

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