Stock Index Futures Gain With Focus on Fed Rate Decision and Big Tech Earnings

September S&P 500 E-Mini futures (ESU26) are up +0.24%, and September Nasdaq 100 E-Mini futures (NQU26) are up +0.32% this morning as a selloff in chipmakers abated, while investors awaited earnings from two of the world’s largest AI spenders and the Federal Reserve’s interest rate decision.

Chip and AI infrastructure stocks edged higher in pre-market trading, stabilizing after days of selling. Providing some relief was data storage company Seagate Technology Holdings (STX), which climbed over +5% in pre-market trading after posting blowout FQ4 results and issuing FQ1 guidance that smashed Wall Street’s estimates. Also, SK Hynix executives said on the earnings call that strong memory-chip demand could persist for years, although shares of the memory chip giant tumbled more than -9% in Seoul as its 13-fold surge in quarterly net profit failed to impress investors.

Meanwhile, the price of WTI crude climbed over +4% on Wednesday after fighting erupted in the Middle East. The U.S. said it intercepted an Iranian “surprise attack” targeting its forces in Jordan. Shortly after Iran’s strikes, the U.S. and Saudi Arabia carried out attacks on Tehran-backed militias in Iraq.

In yesterday’s trading session, Wall Street’s major indexes ended mixed. IQVIA Holdings (IQV) surged over +13% and was the top percentage gainer on the S&P 500 after the healthcare analytics company posted better-than-expected Q2 results and raised its full-year guidance. Also, software stocks gained, with Workday (WDAY) climbing over +8% to lead gainers in the Nasdaq 100 and Thomson Reuters (TRI) rising more than +5%. In addition, Sherwin-Williams (SHW) advanced over +8% and was the top percentage gainer on the Dow after the maker of paints and coatings reported upbeat Q2 results and boosted its annual guidance. On the bearish side, chip and AI infrastructure stocks tanked, with Sandisk (SNDK) sinking over -14% to lead losers in the S&P 500 and Nasdaq 100 and Micron Technology (MU) slumping more than -8%.

“We maintain a constructive outlook on semis amid robust AI demand, but we believe the recent divergence in sector performance is in line with our view that there are more ways to participate in potential market gains than through a narrow set of AI-linked stocks,” said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office.

Economic data released on Tuesday were mixed for equities. The U.S. Conference Board’s consumer confidence index unexpectedly fell to 90.8 in July, weaker than expectations of 92.4. At the same time, the U.S. May S&P/CS HPI Composite - 20 n.s.a. rose +1.6% y/y, stronger than expectations of +1.3% y/y. Also, the U.S. Richmond Fed manufacturing index rose to 5 in July, though it came in below expectations of 7. In addition, U.S. June wholesale inventories rose +0.3% m/m, compared to expectations of +0.4% m/m.

Today, all eyes are focused on the Federal Reserve’s monetary policy decision. The Federal Open Market Committee is widely expected to leave the Fed funds rate unchanged in a range of 3.50% to 3.75%. Employment conditions remain solid, the economy is healthy, and June consumer and producer inflation data came in much cooler than expected, supporting the case for the Fed to stay on hold. However, inflation risks have rebounded this month, driven by renewed Middle East tensions that pushed oil prices sharply higher, an AI-fueled demand boom, and new U.S. tariffs. Against this backdrop, Fed watchers expect a “hawkish hold,” with potentially two to four officials dissenting in favor of a rate hike. T. Rowe Price economist Blerina Uruci said that more than three dissents would provide a stronger signal that the committee is moving toward a September rate hike. U.S. rate futures have priced in a 78.1% chance of a 25 basis point rate hike at the September FOMC meeting.

Second-quarter corporate earnings season kicks into full gear. Investors will be closely monitoring earnings reports today from Magnificent Seven companies Microsoft (MSFT) and Meta Platforms (META). The backdrop heading into their earnings is challenging as investors grow increasingly wary of the massive amounts of money Big Tech companies are spending to build out their AI infrastructure. Alphabet stock was hammered last week after the company raised its full-year capital spending guidance, and its Big Tech peers could face a similar fate. Prominent companies such as Lam Research (LRCX), Arm Holdings (ARM), Qualcomm (QCOM), Procter & Gamble (PG), Starbucks (SBUX), and General Dynamics (GD) are also slated to release their quarterly results today. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +26% jump in quarterly earnings for Q2 compared to the previous year.

On the economic data front, investors will focus on the EIA’s weekly crude oil inventories report, which is set to be released in a couple of hours. Economists expect this figure to be 0.7 million barrels, compared to last week’s value of 2.0 million barrels.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.62%, up +0.24%.

The Euro Stoxx 50 Index is down -0.55% this morning, erasing early gains on a busy day for earnings. Technology stocks slid on Wednesday as sentiment toward the AI trade worsened further after memory chipmaker SK Hynix tumbled more than -9% in Seoul despite posting a 13-fold surge in quarterly net profit. Bank stocks also edged lower as a post-earnings drop in CaixaBank outweighed post-earnings advances in Standard Chartered, Deutsche Bank, and UBS. At the same time, luxury stocks climbed, led by a more than +11% jump in Kering SA (KER.FP) after Gucci sales exceeded estimates. In addition, mining stocks advanced, buoyed by rising metal prices and a positive update from Glencore. Meanwhile, European Central Bank data released on Wednesday showed that Eurozone wage growth is set to moderate this year despite a pickup in inflation linked to the conflict in the Middle East. Investors are now looking ahead to the Fed's policy decision and earnings reports from U.S. megacaps Microsoft and Meta Platforms, due later in the day. Attention will then turn to the Bank of England’s monetary policy decision on Thursday. In other corporate news, Sopra Steria (SOP.FP) jumped over +13% after the French IT group raised its full-year organic revenue growth guidance.

Germany’s Import Price Index was released today.

The German June Import Price Index fell -0.7% m/m and rose +6.1% y/y, compared to expectations of -0.7% m/m and +6.0% y/y.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.40%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.49%.

China’s Shanghai Composite Index closed higher today, supported by gains in consumer-focused stocks. Real estate and consumer stocks outperformed on Wednesday as investors rotated into so-called traditional sectors that have trailed the broader market this year. At the same time, semiconductor stocks slid, though they recouped most of their early losses in the afternoon session as shares of memory chip giant CXMT climbed, prompting some investors to buy the dip. Meanwhile, China’s central bank injected 600 billion yuan via overnight reverse repos in open market operations on Wednesday, according to a statement that did not disclose the borrowing cost. Reuters reported that the borrowing cost was set at 1.25%, unchanged from the prior such operation in late June. The People’s Bank of China also injected 206.5 billion yuan through seven-day reverse repos at a borrowing cost of 1.40%. Investor attention now turns to an upcoming meeting of the Politburo, China’s top decision-making body, where policymakers typically review the economy and fine-tune policy to support growth.  Market participants also look ahead to China’s official PMIs for July, which will offer fresh insight into business sentiment in the world’s second-largest economy. Economists expect the manufacturing PMI to slip into contraction territory, reflecting a pullback in major commodity prices earlier this month, while growth in the non-manufacturing sector is projected to stall due to adverse summer weather.

Japan’s Nikkei 225 Stock Index closed lower and hit a new 2-month low today as investors continued to rotate out of chipmakers amid mounting doubts over whether massive AI spending will generate sufficient returns. Chip and other AI-related stocks led the declines on Wednesday. Chipmakers initially attempted to rebound but later reversed course as SK Hynix tumbled in Seoul after the memory chipmaker’s 13-fold surge in second-quarter net profit failed to impress investors. Sentiment was also dampened by rising oil prices after fighting broke out in the Middle East. Meanwhile, the Yomiuri newspaper reported on Wednesday that Japanese Prime Minister Sanae Takaichi informed ruling party executives of her intention to move forward with a plan to reduce the sales tax on food items to 1% from 8% for two years starting in April next year. In corporate news, Capcom popped over +19% after the game developer posted upbeat quarterly results. Investor focus for the remainder of the week is on the Bank of Japan’s monetary policy decision. The BOJ is widely expected to keep its benchmark rate unchanged at 1.00% on Friday. Investors will closely examine its updated inflation and economic growth projections for clues on the timing and pace of future policy moves. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -3.94% to 39.52.

Pre-Market U.S. Stock Movers

Chip and AI infrastructure stocks edged higher in pre-market trading, stabilizing after days of selling. Intel (INTC) was up over +2%, while Micron Technology (MU) and Advanced Micro Devices (AMD) were up more than +1%.

Seagate Technology Holdings (STX) climbed over +5% in pre-market trading after the data storage company posted blowout FQ4 results and issued FQ1 guidance that smashed Wall Street’s estimates.

Bloom Energy (BE) advanced more than +7% in pre-market trading after the provider of fuel-cell technology reported upbeat Q2 results and raised its full-year guidance.

Ford Motor (F) gained over +6% in pre-market trading after the car maker posted better-than-expected Q2 results and boosted its annual adjusted EBIT guidance.

Skyworks Solutions (SWKS) plunged more than -10% in pre-market trading after the company provided soft FQ4 revenue guidance and suspended its quarterly dividend.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - July 29th

Microsoft (MSFT), Meta Platforms (META), The Procter & Gamble Company (PG), Lam Research (LRCX), Arm Holdings (ARM), Amphenol (APH), QUALCOMM (QCOM), Starbucks (SBUX), Fortinet (FTNT), Automatic Data Processing (ADP), General Dynamics (GD), Equinix (EQIX), Vertiv Holdings Co (VRT), Johnson Controls International (JCI), Robinhood Markets (HOOD), Canadian Pacific Kansas City (CP), O'Reilly Automotive (ORLY), Agnico Eagle Mines (AEM), Carvana Co. (CVNA), Boston Scientific (BSX), Public Storage (PSA), L3Harris Technologies (LHX), Cenovus Energy (CVE), Electronic Arts (EA), Entergy (ETR), Garmin (GRMN), Ventas (VTR), Old Dominion Freight Line (ODFL), Humana (HUM), CBRE Group (CBRE), Chipotle Mexican Grill (CMG), WEC Energy Group (WEC), Vulcan Materials Company (VMC), Fair Isaac (FICO), Biogen (BIIB), VICI Properties (VICI), Kinross Gold (KGC), GE HealthCare Technologies (GEHC), Verisk Analytics (VRSK), American Water Works Company (AWK), Smurfit Westrock (SW), Markel Group (MKL), Woodward (WWD), Cognizant Technology Solutions (CTSH), Bunge Global (BG), SoFi Technologies (SOFI), FTAI Aviation (FTAI), C.H. Robinson Worldwide (CHRW), Essex Property Trust (ESS), Fortive (FTV), Lennox International (LII), Invitation Homes (INVH), Arxis (ARXS), IDEX Corporation (IEX), Masco (MAS), Mid-America Apartment Communities (MAA), Omega Healthcare Investors (OHI), Clean Harbors (CLH), Everest Group (EG), Regency Centers (REG), PTC Inc. (PTC), Stanley Black & Decker (SWK), Penske Automotive Group (PAG), Evercore (EVR), Watsco (WSO), Watsco (WSO.B), GFL Environmental (GFL), Carlisle Companies (CSL), Tyler Technologies (TYL), Ares Capital (ARCC), Alamos Gold (AGI), Align Technology (ALGN), MGM Resorts International (MGM), Service Corporation International (SCI), Aurora Innovation (AUR), Generac Holdings (GNRC), Modine Manufacturing Company (MOD), Antero Resources (AR), Antero Midstream (AM), OGE Energy (OGE), Houlihan Lokey (HLI), Corcept Therapeutics (CORT), Littelfuse (LFUS), Flowserve (FLS), Ionis Pharmaceuticals (IONS), Glaukos (GKOS), Tetra Tech (TTEK), Hexcel (HXL), Avantor (AVTR), Lithia Motors (LAD), National Fuel Gas Company (NFG), Kirby (KEX), Prosperity Bancshares (PB), Morningstar (MORN), Rush Street Interactive (RSI), Sprouts Farmers Market (SFM), Procore Technologies (PCOR), NewMarket (NEU), Silicon Laboratories (SLAB), OneMain Holdings (OMF), Pilgrim's Pride (PPC), V.F. Corporation (VFC), FormFactor (FORM), Eagle Materials (EXP), Sensata Technologies Holding (ST), Plexus (PLXS), Parsons (PSN), MGIC Investment (MTG), Churchill Downs (CHDN), Moelis & Company (MC), Garrett Motion (GTX), Reynolds Consumer Products (REYN), MYR Group (MYRG), Graham Holdings Company (GHC), UFP Industries (UFPI), TFS Financial (TFSL), Silgan Holdings (SLGN), Meritage Homes (MTH), EPR Properties (EPR), Boot Barn Holdings (BOOT), Lemonade (LMND), Waystar Holding (WAY), SiteOne Landscape Supply (SITE), Broadstone Net Lease (BNL), PennyMac Financial Services (PFSI), Cactus (WHD), The Scotts Miracle-Gro Company (SMG), The Chefs' Warehouse (CHEF), Impinj (PI), Newmark Group (NMRK), M/I Homes (MHO), Viking Therapeutics (VKTX), Q2 Holdings (QTWO), Wingstop (WING), Comstock Resources (CRK), Mechanics Bancorp (MCHB), The St. Joe Company (JOE), Adaptive Biotechnologies (ADPT), LXP Industrial Trust (LXP), Option Care Health (OPCH), Tenable Holdings (TENB), Patterson-UTI Energy (PTEN), ArcBest (ARCB), CVR Energy (CVI), Banc of California (BANC), Hayward Holdings (HAYW), Green Brick Partners (GRBK), Provident Financial Services (PFS), Diebold Nixdorf (DBD), SiriusPoint (SPNT), Aris Mining (ARIS).