U.S. stocks are drifting Monday ahead of a week where Wall Street’s most influential stocks may show whether the huge expectations built up for them are justified. The S&P 500 rose 0.1% in afternoon trading. The Dow Jones Industrial Average was down 12 points, or less than 0.1%, and the Nasdaq composite was 0.3% higher.
Quick Read
- U.S. stocks show slight movements as Wall Street anticipates key earnings reports from influential tech giants.
- The S&P 500 slightly rose, while the Dow Jones experienced a minor dip, and the Nasdaq saw a modest increase.
- The performance of “the Magnificent Seven” Big Tech stocks, including Apple, Alphabet, Amazon, Meta Platforms, and Microsoft, is under scrutiny as they prepare to announce quarterly results.
- These tech giants’ outcomes are crucial due to their significant impact on market indices and the need to meet growth expectations.
- The Federal Reserve’s upcoming interest rate decision is highly anticipated, with hopes for a potential rate cut in March.
- Wall Street’s optimism hinges on a scenario where inflation is controlled without leading to a recession, with a crucial jobs report due on Friday.
- The earnings season has been subdued, but the contributions of the Magnificent Seven are expected to be pivotal.
- Meta Platforms and Nvidia are projected to be major contributors to S&P 500’s growth, with Microsoft, Apple, Alphabet, and Amazon also playing significant roles.
- Market reactions to earnings surpassing forecasts have been muted, with some companies like Franklin Resources experiencing stock declines despite positive results.
- SoFi Technologies saw a notable stock increase after reporting better-than-expected financial outcomes and a promising profit forecast.
- iRobot’s stock dropped following the cancellation of its acquisition by Amazon due to antitrust concerns.
- Oil and gas stocks declined amid fluctuating crude prices and geopolitical tensions in the Middle East, including a recent drone strike in Jordan attributed to Iran-backed militias.
- Global market reactions included a mixed response in Chinese stocks following the liquidation order of China Evergrande and regulatory moves affecting short selling in Chinese markets.
The Associated Press has the story:
Wall Street holds steady ahead of a monster week of Fed decision, tech earnings
Newslooks- NEW YORK (AP) —
U.S. stocks are drifting Monday ahead of a week where Wall Street’s most influential stocks may show whether the huge expectations built up for them are justified.
The S&P 500 rose 0.1% in afternoon trading. The Dow Jones Industrial Average was down 12 points, or less than 0.1%, and the Nasdaq composite was 0.3% higher.
Big Tech stocks are the main reason the S&P 500 has soared more than 35% to a record since two autumns ago. A small handful of seven has been responsible for the majority of the index’s returns over that time, propelled by a furor around artificial-intelligence technology and expectations for continued dominance.
Five members of that group, which have been nicknamed “the Magnificent Seven,” will report their latest quarterly profits this upcoming week: Apple, Alphabet, Amazon, Meta Platforms and Microsoft.
Because they’re so much more massive in size than almost every other stock, their movements pack much more weight on the S&P 500 and other indexes. They’ll need to meet analysts’ expectations for growth to justify their huge recent moves.
And that’s not all that’s coming this week.
On Wednesday, the Federal Reserve will make its latest decision on what to do with interest rates. Traders expect it to make no move, but the hope is that it may cut interest rates at its next meeting in March. That would mark the first move lower since the Fed began dramatically raising interest rates two years ago to get high inflation under control.
A wave of encouraging data has Wall Street believing its dream scenario can come true: The Fed will successfully conquer inflation and soon deliver the cuts to rates that investors crave, while the economy skirts through without falling into a recession that seemed inevitable last year.
On Friday, an economic report could bolster or weaken beliefs in that dream. The government will release the latest monthly update on the job market, and economists expect it to show continued growth in hiring, but at a cooler pace. That’s exactly what the Fed would want to see because too much growth could mean upward pressure on inflation.
“This week could be key,” said Chris Larkin, managing director, trading and investing at E-Trade from Morgan Stanley. “If the market is going to sustain its latest breakout, it may need to avoid earnings disappointments from this week’s Big Tech lineup, get encouraging news from the Fed on interest rates, and see jobs numbers that are solid, but not too hot.”
This profit reporting season is expected to be lackluster, with analysts forecasting a fourth drop in earnings per share for S&P 500 companies in the last five quarters. But it would be even worse without the Magnificent Seven.
Facebook’s parent company, Meta Platforms, is expected to be the single biggest contributor to growth for the overall S&P 500, according to FactSet. Nvidia is close behind, followed by Microsoft, Apple, Alphabet and Amazon.
Companies so far this reporting season have not been getting as big a boost to their stock price as usual after topping analysts’ forecasts.
Franklin Resources, an investment manager, fell 2.2% even though it reported stronger profit and revenue for the latest quarter than analysts expected.
SoFi Technologies did better, and its stock jumped 16.1% after the financial services company reported stronger results for the last three months of 2023 than analysts expected. Its forecast for profit this upcoming year also topped analysts’ estimates.
On the losing side of Wall Street, iRobot fell 6.9% after agreeing to call off its purchase by Amazon following scrutiny from antitrust regulators.
Stocks of oil-and-gas companies were slumping after the price of crude swung amid worries about violence in the Middle East.
President Joe Biden said Sunday that the U.S. “shall respond” following a drone strike in Jordan that killed three American troops and injured 25 more. Biden blamed Iran-backed militias for the first U.S. fatalities after months of strikes by such groups against American forces across the Middle East since the start of the Israel-Hamas war.
A barrel of Brent crude, the international standard, rose above $83 in the morning before falling back to $82.16, down 1%. A barrel of benchmark U.S. crude dropped 1.1% to $77.11.
Monday kicked off with a Hong Kong court’s decision to order the liquidation of China Evergrande, the world’s most indebted property developer. Chinese markets were mixed following the ruling, with stocks rising in Hong Kong and falling in Shanghai.
Chinese authorities also made moves to make it more difficult for some investors to “short” Chinese stocks, or bet that their prices will fall. China’s stock markets have been among the world’s worst so far this year amid worries about not only its trouble property industry but also its weak economic recovery.
