Futures edge up ahead of more Big Tech earnings, Fed decision

By Bansari Mayur Kamdar and Johann M Cherian

(Reuters) -U.S. stock index futures edged higher on Monday as investors geared up for earnings from megacap growth and technology companies, with focus also on a rate decision from the Federal Reserve later this week.

Meta Platforms, Microsoft (NASDAQ:) and Alphabet (NASDAQ:) are reporting this week, with traders expecting the big names to signal an end to the nearly year-long slowdown in their cloud businesses, while a pickup in digital ads is also expected to aid profits.

Last week, Netflix (NASDAQ:) and Tesla (NASDAQ:) posted less-than-stellar quarterly reports.

The electric-vehicle maker eased 1.3% in premarket trading after UBS downgraded its rating on the stock, while other megacap growth and technology shares edged higher.

“Investors are holding their breath ahead of key tech earnings, which will paint a picture for how advertising demand is shaping up, as well as how the league tables are looking for the AI race,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

The centerpiece event of the week is the Fed’s policy meeting, with the central bank expected to raise interest rates by 25 basis points on Wednesday.

A majority of economists polled by Reuters still expect this will be the last increase of the current tightening cycle, after data this month showed signs of disinflation, eliminating the need for the Fed to lift rates further and supporting the thesis that has helped buoy stocks in recent weeks.

The tech-heavy Nasdaq has rallied 34% so far this year, outperforming its Wall Street peers, as rate-sensitive megacap growth companies jumped on hopes of an end to the Fed’s tightening cycle and optimism over artificial intelligence.

At 6:56 a.m. ET, were up 44 points, or 0.12%, were up 8.75 points, or 0.19%, and were up 35.25 points, or 0.23%.

The and the Dow ended last week higher with the latter posting its longest winning streak since 2017, helped by strong quarterly reports from healthcare and financial companies.

Toymaker Mattel (NASDAQ:) rose 1.5% as the “Barbie” movie set a record as the biggest domestic debut of 2023, while shares of distributor Warner Bros added 0.7%.

AMC Entertainment (NYSE:) jumped 47.5% after a judge blocked the theater chain’s stock conversion plan that risked diluting investors’ holdings in the company. AMC’s preferred shares fell 2.2%.

Domino’s Pizza (NYSE:) shed 3.2% after the world’s largest pizza chain missed quarterly revenue estimates, as increased delivery fees and higher prices hurt demand for its pizzas and chicken wings.

Exchange operator Nasdaq trimmed the weight of a handful of companies that make up close to half of the to address “overconcentration” in the benchmark.

Also on tap on Monday, S&P Global (NYSE:) is expected to show its flash services sector PMI fell to 54.1 from 54.4 in June, while the closely watched flash manufacturing PMI likely rose to 46.4 in July from 46.3 in the previous month.