Ankika Biswas and Lisa Pauline Matakal
(Reuters) – Wall Street stock futures were little changed on Tuesday amid mixed corporate earnings reports, as investors shifted their attention to earnings reports by big technology companies due later in the day to gauge whether the market’s recent record rally has any momentum left.
Investors’ return to large growth stocks on Monday helped the S&P 500 and Nasdaq post their first daily gains in more than a month, snapping a three-day losing streak caused by investors pulling out of big tech stocks and into underperforming sectors.
All eyes are now on the performance of big tech companies, which will be key in determining whether 2024’s record rally can be sustained as investors gauge whether U.S. stocks are overvalued or still have room to rise.
Alphabet and Tesla are two of the so-called “Magnificent Seven” companies due to report quarterly results after the market close. The group was mostly mixed in premarket trading, but shares in the two companies rose 0.3% and 1.2%, respectively.
“There appears to be a consensus that upcoming numbers are positive, with surveys showing that investors expect corporate earnings results (not necessarily a Fed rate cut) to drive the next phase of stock market gains,” ING analysts said in a note.
“On a total return basis, the Magnificent Seven are down nearly 8% this month, and tonight’s release will have a big impact on whether the rally resumes.”
Amid a flurry of corporate earnings reports, Spotify Technology jumped 13% after its second-quarter results were roughly in line with analyst expectations, while General Motors rose 4.6% after its profit and sales beat expectations.
United Parcel Service Inc. fell 7.8 percent after profit fell short of expectations due to weak demand for package delivery and higher labor contract costs.
Coca-Cola rose 1.0% after reporting its earnings, while Comcast rose 2.2%.
Of the 74 S&P 500 companies that reported quarterly results this earnings season, 81.1% beat expectations, according to LSEG data.
As of 7:12 a.m. ET, the Dow e-mini was up 34 points (0.08%), the S&P 500 e-mini was up 4 points (0.07%) and the Nasdaq 100 e-mini was down 4.75 points (0.02%).
Economic data due this week will also include the personal consumption expenditures price index, the Fed’s preferred inflation gauge, and will be crucial in assessing the outlook for monetary policy amid a recent trend of declining inflation and signs of easing in the labor market.
According to CME’s FedWatch tool, views that a 25 basis point rate cut will occur by September have jumped to about 92% from about 60% last month, with two rate cuts expected by the end of the year.
The story continues
Among other individual stocks, NXP Semiconductors, which is struggling with weak demand from automotive customers, fell 7.9 percent after it forecast weaker-than-expected third-quarter sales.
Other semiconductor stocks, including ON Semiconductor, Texas Instruments and Advanced Micro Devices, fell between 0.7% and 2.5%.
AI chip company Nvidia fell 0.4% after posting its biggest one-day gain in nearly a month in trading on Monday.
Shares of Trump Media & Technology Group fell 3.1% in volatile trading on Monday after President Joe Biden dropped out of the Democratic presidential race and Vice President Kamala Harris emerged as the party’s presumptive nominee.
(Reporting by Ankika Biswas and Lisa Matakkal in Bengaluru; Editing by Shaunak Dasgupta and Pooja Desai)