U.S. stock indexes are experiencing mixed trading on Monday as investors brace themselves for a week filled with earnings reports from influential companies on Wall Street. Additionally, the Federal Reserve’s meeting on interest rates is also on the horizon. The S&P 500 is up 0.3% in morning trading, following its first consecutive weekly losses since April. On the other hand, the Dow Jones Industrial Average is down 67 points, or 0.2%, as of 10:25 a.m. Eastern time, while the Nasdaq composite is 0.7% higher.
ON Semiconductor, a supplier to the auto and other industries, has emerged as a market leader, with its shares jumping 12.8% after reporting stronger-than-expected profits for the spring. McDonald’s has also seen a positive turn, rising 3.3% after initially experiencing a loss. Although the company’s latest quarter’s profit and revenue fell short of forecasts, analysts believe that its performance at U.S. restaurants was not as dire as some investors had feared.
This week, the market eagerly awaits earnings reports from major players such as Microsoft on Tuesday, Apple and Amazon on Wednesday, and Meta Platforms on Thursday. These companies hold significant weight on Wall Street due to their large market value. However, the recent slowdown in the Big Tech stocks’ upward trajectory, coupled with concerns over their expensive valuations, has dampened their momentum. Disappointing profit reports from Tesla and Alphabet last week have raised doubts about the performance of other stocks in the so-called “Magnificent Seven.”
Despite the challenges faced by these tech giants, the U.S. stock market has found support from sectors that were previously beaten down by high interest rates aimed at curbing inflation. Smaller stocks, in particular, have surged on expectations that the Federal Reserve will soon begin cutting interest rates in response to slowing inflation. The Russell 2000 index, which represents smaller stocks, is currently down 0.1% on Monday but has gained an impressive 10.3% this month, leading the market.
The Federal Reserve’s policy meeting on interest rates is scheduled for this week, with an announcement expected on Wednesday. While no immediate action is anticipated, it is widely expected that the Fed will commence easing at its subsequent meeting in September. The yield on the 10-year Treasury has slipped to 4.17% from 4.19% late Friday and from 4.70% in April.
In other market news, Abbott Laboratories experienced the largest loss in the S&P 500, dropping 4.4%. Analysts attribute this decline to a jury awarding nearly $500 million in compensation and damages against the company in a case related to its Similac baby formula. The magnitude of the award may have exceeded some investors’ expectations.
Internationally, the Nikkei 225 index in Japan surged 2.1%, and the country’s central bank is also expected to announce a decision on interest rates this week, with expectations of a rate hike. In Hong Kong, indexes rose 1.3%, while Shanghai remained relatively flat after official data revealed a 3.5% increase in industrial profits for the first half of 2024 compared to the previous year. This positive news follows recent interest rate cuts and other stimulus measures implemented after a policy meeting of the ruling Communist Party earlier this month.
As the Bank of England prepares for its meeting this week, the FTSE 100 in London rose 0.5%, with some investors anticipating a cut in interest rates.