U.S. Stock Futures Show Modest Gains Ahead of Central Bank and Earnings Events

Introduction

U.S. stock futures are showing slight gains on Monday, as traders anticipate a busy week filled with central bank announcements and corporate earnings reports.

How are stock-index futures trading?

• S&P 500 futures (ES00) rose 6 points, or 0.1%, to 4571
• Dow Jones Industrial Average futures (YM00) added 20 points, or 0.1%, to 35418
• Nasdaq 100 futures (NQ00) eased 38 points, or 0.2%, to 15578

Previous Market Performance

On Friday, the Dow Jones Industrial Average rose 3 points, or 0.01%, to 35228, while the S&P 500 increased 1 point, or 0.03%, to 4536. However, the Nasdaq Composite dropped 31 points, or 0.22%, to 14033.

Dow Jones Industrial Average Futures on a Winning Streak

Dow Jones Industrial Average futures continue to climb and are on track for an 11th consecutive day of gains, marking its best run since 2017. The index currently sits at its highest level since March 2022, which signals a broader market rally beyond just big tech stocks.

Optimism Amidst Inflation Concerns

Investors are hopeful that the recent slowdown in inflation will lead central banks to halt their rate hike campaigns. Additionally, they believe that any potential economic downturn resulting from monetary tightening will not significantly impact corporate profits.

Anticipated Events

The upcoming week will be filled with significant events for traders, including rate decisions from the top three central banks and the release of earnings reports from numerous U.S. companies. These developments are expected to provide valuable insights and opportunities in the market.

Federal Reserve Expected to Raise Borrowing Costs

The Federal Reserve is expected to increase borrowing costs by 25 basis points on Wednesday, bringing the range to 5.25% to 5.50%. Investors will be eager to learn if this will be the final adjustment for this cycle.

Bank of Japan to Maintain Rates

On Friday, the Bank of Japan is anticipated to keep rates unchanged. However, they may provide insight into their plans to remove aspects of their ultra-loose policy, such as bond purchases aimed at suppressing yields.

European Central Bank Decision Approaching

The European Central Bank is scheduled to announce its decision on Thursday. Although another increase in borrowing costs is forecasted, the ECB’s approach may be tempered due to recent reports indicating a decline in economic activity across the eurozone.

Corporate Results to Watch

Several corporate results are due this week. On Monday, Domino’s Pizza, Whirlpool, Logitech, and NXP Semiconductors are set to release their figures. Alphabet and Microsoft will follow on Tuesday, while Meta is scheduled for Wednesday, and Intel on Thursday.

Economy and Interest Rate Debate

As the debate on how much the economy should be stimulated with higher rates to control inflation continues, there has been some stagnation in US markets after strong gains last week, according to Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

Tech Earnings and Market Volatility

Investors are eagerly awaiting key tech earnings, which will provide insights into advertising demand and the competitive landscape in the AI race. Market volatility, particularly from the Nasdaq composite, is expected to be a significant factor moving forward.

U.S. Economic Updates: July Manufacturing and Services PMIs

On Monday, prepare yourself for the latest updates on the U.S. economy. At 9:45 a.m. Eastern, the S&P will be releasing the “flash” U.S. manufacturing and services PMIs for July. These indicators will provide valuable insights into the current state of the country’s manufacturing and services sectors.

Stay tuned for this important announcement as it will shed light on the overall performance and growth of these key areas in the U.S. economy.