Market Watch: Dow futures contract fell 0.5%, S&P 500 futures dropped 0.7%, and Nasdaq 100 futures fell 1%.
Wall Street is expected to open negatively on Wednesday, with disappointing second-quarter results from Alphabet and Tesla, volatile US political situation, and the Eurpean earnings season accelerating.
Harris lead
A recent opinion poll from Reuters/Ipsos shows Vice President Kamala Harris slightly ahead of Republican Donald Trump, with a margin of error of plus or minus three percentage points.
The poll, conducted between July 22 and 23, showed Harris leading 44% to 42%. Trump is set to hold his first campaign rally since Biden’s withdrawal in Charlotte, North Carolina, a crucial battleground in the Nov. 5 election.
Tesla and Alphabet earnings
Tesla and Alphabet have started the market-leading mega caps reporting, but investors were left underwhelmed. Tesla’s stock slumped 7% after reporting its lowest profit margin in five years in the second quarter, as it cut prices to revive demand and increased spending on AI projects.
Alphabet’s stock dropped just over 2% after hours, despite beating second-quarter revenue and profit estimates. Alphabet’s chief revenue source, advertising sales, rose 11% to $64.6 billion, while net income rose 28.6% to $23.6 billion.
Total revenue grew 14% to $84.74 billion, with ad sales in its YouTube division rising 13% to $8.67 billion. Capital expenditure jumped 91% to $12 billion in the quarter
Banks lead European earnings
European earnings season is thriving, with banks leading the way. Deutsche Bank’s stock fell 8% after reporting its first quarterly loss in four years, while BNP Paribas’ stock fell 2% due to a drop in net interest income at its French retail business. Other companies, including LVMH, Remy Cointreau, and easyJet, experienced declines in sales and profits.
Economic Calendar
- 07:00 AMÂ MBA Mortgage Applications
- 09:45 AMÂ PMI Composite Flash
- 10:00 AMÂ New Home Sales
- 10:30 AMÂ EIA Petroleum Inventories
- 11:00 AMÂ Survey of Business Uncertainty
- 11:30 AMÂ Results of $30B, 2-Year FRN Auction
- 01:00 PMÂ Results of $70B, 5-Year Note Auction
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Recent data indicating a possible cooling in the U.S. economy have alleviated some persistent inflation concerns, fueling hopes that the Federal Reserve will start to bring interest rates down from more than two-decade highs as soon as September. Along with the Dow, the benchmark and tech-heavytouched record marks last week.
The durability of the strength on Wall Street will likely be tested by a fresh batch of corporate results this week, including quarterly returns from artificial intelligence darling Nvidia (see below). Durable goods and consumer sentiment data will also be in focus as markets hunt for more evidence that growth is moderating enough to give the Fed justification for rolling out rate cuts this year.
Recent data indicating a possible cooling in the U.S. economy have alleviated some persistent inflation concerns, fueling hopes that the Federal Reserve will start to bring interest rates down from more than two-decade highs as soon as September. Along with the Dow,
The durability of the strength on Wall Street will likely be tested by a fresh batch of corporate results this week, including quarterly returns from artificial intelligence darling Nvidia (see below). Durable goods and consumer sentiment data will also be in focus as markets hunt for more evidence that growth is moderating enough to give the Fed justification for rolling out rate cuts this year.
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MFitch Ratings has downgraded China’s credit rating outlook to “Negative” from “Stable” due to concerns over growing public debt and slowing growth in the world’s second-largest economy. The agency affirmed China’s rating at A+, citing increasing risks to China’s public finance outlook. Concerns over slowing economic growth have grown in recent months, with Fitch expecting gross domestic product growth to fall to 4.5% in 2024.
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U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.
U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.