Five things you need to know before the market opens on Thursday July 27:
1. -- Stock Futures Higher, Dow On Best Run Since 1987
U.S. equity futures moved higher again Thursday, helping the Dow extend its longest winning streak in more than three decades, as investors digested potentially dovish interest rate signals from the Federal Reserve and prepared for another policy decision from Europe later in the sesssion.
Tech stocks look set to power much of today's gains, however, following a stronger-than-expected second quarter update from Nasdaq heavyweight Meta and after-the-bell earnings from online retail giant Amazon.
The moves higher come in concert with the Fed's widely-anticipated decision to lift its benchmark Fed Funds rate by another quarter point, to between 5.25% and 5.5%, while suggesting that it may be at or near the end of what has been the most aggressive tightening cycle in four decades.
"We’ve raised the federal-funds rate now by 525 basis points since March 2022," Fed Chairman Jerome Powell told reporters in Washington yesterday. "Monetary policy, we believe, is restrictive and is putting downward pressure on economic activity and inflation."
Up next is a policy decision from the European Central Bank, expected at 8:15 am Easter time, where President Christine Lagarde is expected to announce another quarter point increase across its three main interest rates
Forward guidance, however, is likely to me slightly-less hawkish than during past meetings, with the region's largest economies flirting with recession and inflation slowing - albeit at a very modest pace.
The euro was marked 0.005% higher against the dollar at 1.1132 ahead of the ECB rate decision, while the U.S. dollar index, a broader measure of the greenback against a basket of global currencies, fell 0.27% overnight to 100.581.
The Europe-wide Stoxx 600 was marked 1.02% higher in early Frankfurt trading while Britain's FTSE 100 gained 0.24% in London.
In the U.S., benchmark 10-year note yields eased to 3.873% in overnight trading, while 2-year paper backed-up to 4.835%.
Another busy session on Wall Street will see the Commerce Department publishing its first estimate of second quarter GDP growth at 8:30 am Eastern time, with analysts looking for a annualized gain of around 1.8% for the world's biggest economy.
Weekly jobless claims are also expected at 8:30 am, with earnings from Mastercard (MA) -), McDonald's (MCD) -), Bristol-Myers (BMY) -) and Comcast (CMCSA) -) due before the start of trading.
Futures contracts tied to the S&P 500 were indicating a 27 point opening bell gain while those linked to the Dow Jones Industrial Average were priced for a 60 point advance,, a gain that would extend its winning streak to 14 consecutive session, the longest since 1987. Nasdaq futures were 200 points.
In overnight trading, the MSCI ex-Japan index was marked 0.79% higher into the close of trading while Japan's Nikkei 225 ended the session up 0.68% at 32,891.16 points.
2. -- Powell Says Fed Will Be Data Dependent After Resuming Rate Hikes
The Federal Reserve delivered, as expected, its eleventh rate hike in sixteen months, taking the Fed Fund rate to the highest levels since the early 2000s but hinting that further increases are likely to be based on incoming data.
The shift in tone, while modest, has investors betting that Chairman Jerome Powell and his colleagues have executed their last rate hike of the year, and possibly longer, as inflation continues its slow retreat back to the Fed's 2% target, the job market cools and broader economic growth weakens.
"All of that information is going to inform our decision as we go into that meeting," Powell told reporters in Washington. "I would say it is certainly possible that we would raise funds again at the September meeting if the data warranted and I would also say it’s possible that we would choose to hold steady at that meeting."
The CME Group's FedWatch tool suggests only a 20% chance of a follow-on hike in September, and pegs the odds of a quarter point move in November at 29.1%.
The first rate cut from the Fed, however, is expected by markets in the early Spring, a prediction Powell attempted to push back against during his press briefing, but also wouldn't completely reject.
"I think you take both into account. I think you take everything into account when you start cutting rates. It would depend on a wide range of things," Powell said. "That’s just going to be a judgement that we have to ... a full year from now. And it’ll be about how confident we are that inflation is, in fact, coming down to our 2% goal.
3. -- Meta Platforms Surges As Ad Sales, Reels, Power Q2 Earnings Beat
Meta Platforms (META) -) shares surged higher in pre-market trading thanks in part to a resilient ad market and bets that its AI rollout will offset more red ink in its metaverse unit.
Solid ad sales powered Meta's overall revenues 11% higher from last year to $32 billion, a billion ahead of Street forecasts, while earnings for the three months ending in June rose 21.1% to $2.98 per share.
Ad impressions rose 34%, Meta said, although the average price per ad was down 16%.
Meta unveiled a series of new AI-related tools it plans to roll-out across its various apps last month, including a chatbot similar to ChatGPT for Facebook Messenger and WhatsApp and has said its been working with advertisers in testing consumer-facing generative AI techniques.
Looking into the current quarter, Meta said it sees revenues in the region of $32 billion to $32.5 billion, a range that fall under the Street forecast of $31.3 billion.
Reality Labs, the division that houses the group's metaverse ambitions, booked an operating loss of $3.74 billion, taking the total amount of red ink it's spilled since its inception in 2021 to around $40 billion.
Meta Platforms shares were marked 7.85% higher in pre-market trading to indicate an opening bell price of $322.00 each.
4. -- Amazon On Deck As 'Magnificent Seven' Earnings Continue To Impress
Amazon (AMZN) -) shares moved higher in pre-market trading ahead of the online retail and web services giant's second quarter earnings after the closing bell.
Amazon, the fifth of the co-called 'Magnificent Seven' mega-cap tech companies to report June quarter earnings this far, is expected to post net income of 35 cents per share, up from last year's loss of 20 cents per share, on revenues of $131.7 billion.
Amazon itself forecast operating income of between $2 billion $5 billion on revenues in the range of $127 billion to $133 billion for the three months ending in June following stronger-than-expected first quarter earnings earlier this year.
Amazon Web Services is likely to see growth of around 9.8% over the second quarter, the lowest on record, amid a pullback in enterprise spending. AWS contributed $21.4 billion to the group's overall sales last quarter, a 16% increase from last year, but slowing growth rates and narrowing margins have raised concerns for the division's profitability heading into the second half of 2023.
Amazon shares were marked 1.44% higher in pre-market trading to indicate an opening bell price of $130.00 each.
5. -- Intel In Focus As Chip Sector Looks To AI Boost, China Challenge
Intel (INTC) -) shares moved higher in pre-market trading ahead of the chipmaker's second quarter earnings slated for after the closing bell.
Analyst expect the group to post an adjusted loss of 3 cents per share, down from a profit of 29 cents per share over the same period last year, on revenues of $12.13 billion.
Intel expects sales of around $12 billion over the three months ending in June with modestly softer gross margins of around 33.2%. That figure is set to improve to around 40%, over the second half of the year, however, amid a broader chip sector recovery.
However, it's also likely to be affected by the Biden Administration's effort to limit the export of AI and high-tech semiconductors to China, as officials in Beijing target American chipmakers for reprisal tariffs or import bans.
Intel, which unveiled plans for significant investments in Europe last month, including a new production facility in Poland and the biggest-ever foreign investment in Germany, is looking to take advantage of European Union subsidies amid the region's broader push to lessen its reliance on China supply chains. Intel also finalized plans to build a $25 billion factory in Israel in early June.
Intel shares were marked 1.16% higher in pre-market trading, indicating an opening bell price of $34.76 each
