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Dow futures just higher; major tech earnings, jobs report in focus

Published 07/30/2023, 07:26 PM
Updated 07/31/2023, 06:47 AM
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Investing.com -- U.S. stock futures have started Monday in a subdued manner, but the market remains on course to post strong gains this month on expectations of an end to the Federal Reserve’s tightening cycle as well as generally strong corporate earnings.

By 06:30 ET (10:30 GMT), the Dow Futures contract was up 25 points, or 0.1%, S&P 500 Futures traded 2 points, or 0.1%, higher, while Nasdaq 100 Futures dropped 7 points, or 0.1%.

The benchmark Wall Street indices have all recorded healthy gains this month, with the blue chip Dow Jones Industrial Average up 3.1% in July, after posting a 13-day winning streak, which ended last week. The broad-based S&P 500 has gained 3% and the tech-heavy Nasdaq Composite 3.8%, with both of these indices on track for a fifth consecutive winning month.

Jobs report is the week’s data highlight

The Federal Reserve raised interest rates to the highest level in 22 years last week, but also changed its forecast to no longer predict a U.S. recession this year.

Additionally, expectations are growing that inflation is slowing enough for this to be the last hike of the central bank’s year-long tightening cycle, helped by Friday’s second-quarter Employment Cost Index falling to 1.0%, a drop from 1.2% in the first quarter and a peak of 1.4% in the first quarter of 2022.

Fed chair Jerome Powell made it clear any future decisions would be data dependent, which brings Friday's U.S. jobs report firmly into focus. This is expected to show that the economy added 200,000 jobs in July, while the unemployment rate remained at a historical low of 3.6% and average hourly earnings cooled.

Positive earnings boost sentiment

The earnings season rolls on, with megacaps Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) due to report earnings later this week.

More than half of the firms listed on the S&P 500 had reported second-quarter earnings as of Friday, out of which 78.7% have surpassed analyst expectations, according to Refinitiv data, cited by Reuters.

Citigroup raised its year-end target for the S&P 500 by 15% earlier Monday as it now sees a higher probability of a soft landing for the U.S. economy, as well as an earnings upside.

Elsewhere, Walmart (NYSE:WMT) is likely to be in the spotlight after the Wall Street Journal reported that the retail giant has increased its stake in Flipkart through a $1.4 billion purchase of shares from a major investor in the Indian e-commerce group.

Crude gains on U.S. economic optimism

Oil prices rose Monday as a more upbeat look at the crude market by Goldman Sachs overshadowed weak Chinese manufacturing activity data.

Influential investment bank Goldman Sachs on Sunday lifted its global oil demand forecast for the year to an all-time high of 102.8 million barrels per day in July, citing a reduced recession risk and a strong effort by the Organization of the Petroleum Exporting Countries to push up prices.

The crude market is on track for its biggest monthly gain in over a year on expectations of tightening global supply with Saudi Arabia seen as likely to extend its production cuts into September.

By 06:30 ET, U.S. crude futures traded 0.7% higher at $81.17 a barrel, while the Brent contract climbed 0.6% to $84.92.

Both contracts settled on Friday at their highest levels since April, gaining for a fifth straight week, and are on track to close this month with their biggest monthly gains since January 2022.

Additionally, gold futures fell 0.2% to $1,995.10/oz, while EUR/USD traded 0.2% higher at 1.1037.

(Oliver Gray contributed to this item.)

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