S&P 500 edges higher ahead of busy week as Fed meeting, big tech earnings loom

S&P 500 Edges Higher Ahead of Tech Earnings and Fed Meeting

The S&P 500 saw a slight increase on Monday, as investors anticipate key tech earnings reports and the Federal Reserve meeting scheduled for this week.

By 14:35 ET (13:45 GMT), the Dow Jones Industrial Average had dropped 19 points, or 0.05%, while the S&P 500 climbed 8 points, or 0.2%, and the NASDAQ Composite gained 0.1%.

Fed Meeting to Clarify Rate Cut Outlook

The U.S. Federal Reserve will conclude its latest meeting on Wednesday, with widespread expectations that interest rates will remain unchanged. Investors are keenly watching for indications from the central bank regarding potential interest rate cuts, amidst signs of cooling inflation in recent months.

Federal Reserve officials’ recent comments suggest they are likely to maintain the current rates at the upcoming meeting. However, Goldman Sachs economists note that the likelihood of an interest rate cut is increasing, driven by favorable inflation data from May and June. The second quarter showed significant improvement in inflation, following higher figures in the first quarter due to residual seasonality and typical month-to-month noise.

Traders are pricing in a 25 basis point cut by the Fed in September, according to CME Fedwatch.

Major Tech Earnings This Week

This week will see earnings reports from some of Wall Street’s largest companies, with Microsoft (NASDAQ

) and Apple (NASDAQ

) set to report on Tuesday and Thursday, respectively. Other tech giants such as Meta Platforms (NASDAQ

), Advanced Micro Devices (NASDAQ

), and Amazon (NASDAQ

) will also release their earnings throughout the week.

These reports follow a prolonged slump in technology stocks, driven by profit-taking and investor shifts toward more economically sensitive sectors amid expectations of rate cuts. Last week’s disappointing earnings from Alphabet (NASDAQ

) have heightened caution, with investors awaiting evidence of returns on increased artificial intelligence investments.

McDonald’s, Tesla, and Stellantis in the Spotlight

McDonald’s (NYSE

) stock rose 4% despite a surprise drop in quarterly global comparable sales. Optimism persists on Wall Street regarding the fast-food chain’s five-dollar meal deals launched on June 25, which are expected to boost results in the latter half of the year.

Tesla Inc (NASDAQ

) gained 5% after Morgan Stanley named it the top pick among U.S. auto stocks.

Stellantis NV (NYSE

) fell more than 3% to a 52-week low after Deutsche Bank downgraded the stock from buy to hold, citing concerns about the automaker’s ability to meet its guidance amid issues like inventory and pricing.

Focus on the Labor Market

The main economic data release this week will be Friday’s nonfarm payrolls report, with economists expecting the U.S. economy to have created 177,000 jobs in July, down from 206,000 in June.

In addition to the nonfarm payrolls report, several other employment reports are due throughout the week, including the Job Openings and Labor Turnover Survey (JOLTS), ADP Employment, and weekly jobless claims. These reports will be closely analyzed for signs of an easing labor market.