On Sunday night, there was a bit of a setback in U.S. stock futures as Wall Street geared up for major tech earnings reports and awaited the Federal Reserve’s decision on interest rates.
The Dow Jones Industrial Average futures slipped by 0.2%, around 86 points, while the S&P 500 and Nasdaq 100 futures were down 0.2% and 0.3%, respectively.
Last week, we saw gains across the board driven by positive economic data. Fourth-quarter economic growth beat expectations, and yearly core inflation was lower than anticipated, suggesting a potential slowdown in price increases. However, the market’s excitement was a bit subdued compared to the previous week, mainly due to disappointing earnings reports from big players like Intel and Tesla.
The upcoming week is shaping up to be the busiest in the earnings season, with 19% of the S&P 500 companies set to report. Tech giants like Microsoft, Apple, Meta, Amazon, and Alphabet—leading the market rally this year—will be sharing their results. Additionally, all eyes are on Dow components such as Boeing and Merck as they unveil their quarterly earnings.
At the same time, the Federal Open Market Committee is kicking off its two-day policy meeting on Tuesday. It’s widely expected that the central bank will maintain the current interest rates. Market indicators suggest a nearly 97% probability that the Fed won’t be cutting rates in this meeting, according to the CME Group.
Sonu Varghese, a global macro strategist at Carson Group, is confident that the Fed isn’t overly concerned about an overheated economy causing inflation. With the economy trending above average and inflation on the decline, Varghese suggests an overweight in equities for portfolio allocation.
While anticipating a potential rate cut later in the year, he also cautions that the market might not see as much capital appreciation as initially expected.
