NEW YORK: US main stock indexes were sluggish on Monday as investors awaited major events this week including the Federal Reserve’s interest rate decision and big-ticket tech earnings that could test Wall Street’s record breaking rally.
A slew of megacap earnings will be under investor lens after disappointing forecasts from Intel and Tesla last week deepened concerns about overvaluation of the momentum stocks that have spearheaded a market rally since last year’s end.
Microsoft, which through its partnership with Open AI piqued market interest around artificial intelligence in 2023, is expected to report a 15.8% jump in quarterly revenue on Tuesday. The stock was up 0.6%.
Among others, Alphabet is set to report results on Tuesday, while Apple, Meta Platforms, Amazon.com, Exxon Mobil, Chevron, Qualcomm, Merck, Pfizer and Boeing are due later this week.
“The earnings probably don’t justify the current trading levels, but when you factor in rate cuts, it makes you feel somewhat good about the market and optimistic that the rally can continue,” Robert Pavlik, senior portfolio manager at Dakota Wealth.
The benchmark S&P 500, which rose over 16% in the last two months of 2023, has notched a series of all-time closing highs this month as well as confirmed a bull market on Jan. 19.
Meanwhile, BlackRock raised its overall US stocks view to “overweight” from “neutral.” With recent data indicating a resilient economy and inflation trending lower, hopes of a Goldilocks scenario - a not too hot or cold economy - have gained steam. Last week, data showed a continued moderation in US prices.
So the global focus this week will be the year’s first US monetary policy decision, expected on Wednesday.
Crucial job reports including JOLTS or Job Openings and Labor Turnover Survey and the ADP National Employment will be thoroughly parsed before the Fed’s policy decision for clues on the US labor market strength.
Traders’ bets currently reflect most expectations of rate cuts in June, with some hoping for cuts as early as March.
At 11:27 a.m. ET, the Dow Jones Industrial Average was down 16.46 points, or 0.04%, at 38,092.97, the S&P 500 was up 1.04 points, or 0.02%, at 4,892.01, and the Nasdaq Composite was up 27.38 points, or 0.18%, at 15,482.74.
The S&P 500 energy was the worst-hit sectoral index, tracking lower crude prices, while consumer discretionary was the top gainer.
IRobot dropped 10.1% as the robot vacuum maker and Amazon dropped their merger plans in the face of opposition from EU antitrust regulators.
Meta Platforms rose 1.2% after brokerage Jefferies raised its target price on the stock to $455 from $425.
Financial technology firm SoFi Technologies jumped 22.9% on posting a fourth-quarter profit after a loss in the year-ago period.
Advancing issues outnumbered decliners by a 1.19-to-1 ratio on the NYSE and by a 1.28-to-1 ratio on the Nasdaq.
The S&P index recorded 19 new 52-week highs and no new lows, while the Nasdaq recorded 76 new highs and 66 new lows.
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