Monday July 25th

U.S. stock index futures rose on Monday morning, coming off a positive week for the major averages, as traders brace for the busiest week of corporate earnings, as well as insights into further interest rate hikes from the Federal Reserve. Dow Jones Industrial Average futures rose 173 points, or 0.3%. S&P 500 futures gained 0.3% as well and Nasdaq 100 futures gained 0.2%. Monday kicks off the final week of trading for the month of July, and perhaps the most important week of the summer, with the Fed set to meet later this week as well as GDP data and earnings from the mega cap tech companies on deck. The storm of earnings and economic reports could fuel, or temper, ongoing investor worries about the potential of a recession. “Investors likely believe Thursday’s GDP report will show a second quarter of decline, which is the unofficial signal of recession,” Sam Stovall, chief investment strategist at CFRA Research, told CNBC Monday. “While the Fed will probably announce a 75-basis-point rate hike on Wednesday, they will offer a more moderate tone towards further rate increases. We see this counter-trend rally continuing in the near term.” On Friday, the major averages fell on the back of weaker-than-expected earnings from Snap that sent tech shares tumbling. Still, all three benchmarks closed the week higher, with the Dow up 2%. The S&P 500 advanced about 2.6%, and the Nasdaq capped the week up 3.3%. It was the second positive week in the last three for the major averages. The S&P 500 has been attempting a comeback after falling into a bear market earlier this year. The index is currently up more than 8% from its 2022 and trading near the highest levels since early June. Investors shifted into risk assets last week after absorbing some strong corporate results that had Wall Street deliberating whether the bear market has found a bottom. “Equities have managed to stage a rally MTD, and climb a wall of worry. The bounce has been led by cyclical and Growth stocks, helped by longer end yields stabilizing, which in turn eases the pressure on P/E’s,” Barclays’ Emmanuel Cau wrote in a Friday note. “This confirms to us that the market’s focus has switched from inflation worries to growth worries, with a sense that bad news is becoming good news again,” Cau added. As of Friday, about 21% of companies in the S&P 500 reported earnings. Of those, nearly 70% beat analysts’ expectations, according to FactSet. Investors will face a stacked week of earnings ahead that will include reports from major tech giants Alphabet, Amazon, Apple and Microsoft. The Federal Reserve on Wednesday will also conclude its two-day policy meeting. Economists are widely expecting a three-quarter point hike. Hong Kong’s Hang Seng Tech index dropped on Monday as major indexes in Asia-Pacific slipped. The Hang Seng index in Hong Kong fell 0.22% to close 20,562.94, and the Hang Seng Tech index lost 1.38%. Hong Kong shares of U.S.-listed Chinese companies dropped on Monday. Nio plunged 6.42%, XPeng lost 6.3% and Alibaba fell 2.45%. Mainland China markets were also lower. The Shanghai Composite slipped 0.60% to 3,250.39, and the Shenzhen Component shed 0.83% to 12,291.59. The Nikkei 225 in Japan declined 0.77% to 27,699.25 and the Topix index lost 0.65% to 1,943.21. In South Korea, the Kospi bucked the trend to rise 0.44% to 2,403.69, while the Kosdaq was about flat at 789.69. Oil prices were relatively steady on Monday as the market balanced supply fears with expectations that rise in U.S. interest rates would weaken fuel demand. Brent crude futures for September settlement rose $1.18, or 1.14%, to $104.38 per barrel, while U.S. West Texas Intermediate (WTI) crude futures rose $1.21, or 1.3%, to $95.91 a barrel. Gold prices slipped on Monday as prospects of an aggressive interest rate hike by the U.S. Federal Reserve this week dented demand for non-yielding bullion. Spot gold was down 0.06% at $1,725.34 per ounce, after rising to a more than one-week high on Friday. U.S. gold futures fell 0.21% to $1,723.7 per ounce. The dollar slipped against its rivals, with the dollar index down 0.39% to 106.31.