NASDAQ 100, Dow Jones, S&P 500: Stable Trade as Spotlight Turns to Tech Giants Alphabet, Microsoft

Highlights

• Stocks steady, Dow aims for longest streak.
• Impressive 79% surpass earnings expectations.
• Caution as Fed decision looms.

Overview

Stocks experienced a day of little change as the Dow Jones Industrial Average aimed to extend its longest winning streak in over six years, amidst careful consideration of the latest earnings reports.

Despite General Motors raising its full-year earnings guidance, the company’s shares fell by over 5%. On the other hand, General Electric saw a nearly 5% climb, buoyed by stronger-than-expected revenue in the second quarter. The spotlight now turns to tech giants Alphabet and Microsoft, set to unveil their quarterly results post-market.

At 14:26 GMT, the blue chip Dow is trading 35430.80, up 19.56 or +0.06%. The benchmark S&P 500 is at 4562.94, up 8.30 or +0.18% and the tech-weighted Nasdaq Composite is trading 14135.23, up 76.36 or +0.54%.

Strong Earnings Propel Market Higher

With approximately 130 S&P 500 companies already having reported their second-quarter earnings, an impressive 79% have surpassed analyst expectations, according to FactSet data. The Dow’s 11th consecutive winning session brought a rise of more than 183 points, or 0.5%, reaching its highest level since April 2022 and closing at its peak since February 2022. The S&P 500 and the Nasdaq Composite made gains of 0.4% and 0.2%, respectively.

Investors Await Fed’s Policy Outlook

While the robust earnings season has propped up the market rally, investor focus remains intently fixed on the Federal Reserve’s upcoming policy decision on Wednesday. With a 98% probability of a quarter-point hike, as suggested by Fed fund futures data from the CME FedWatch Tool, all eyes are on Chair Jerome Powell’s economic outlook and his approach to tackling inflation.

Caution Persists as Markets Rally

However, amidst the market’s evident momentum, concerns arise about the fundamental backdrop. Despite the current subdued yet steady growth, analysts caution that there are underlying risks. Economic and earnings risks appear to be one-sided, with potential downside looming over economic growth. The situation remains uncertain, and investors await further signals to navigate the market terrain.

Short Term Outlook:  Cautious Stance

In conclusion, the stock market maintains its cautious stance as it balances positive earnings results against potential economic risks. With the Federal Reserve’s imminent decision and Chair Jerome Powell’s statements on the economy, traders brace for possible impacts on their investment strategies. The road ahead remains unpredictable, and the market’s resilience will be tested in the face of evolving economic conditions.