Five things you need to know before the market opens on Tuesday, July 25:
1. -- Stock Futures Mixed With Earnings, Fed In Focus
U.S. equity futures were mixed Tuesday, while the dollar held gains against its global peers and Treasury yields nudged higher, as investors braced for a key slate of corporate earnings and the start of the Federal Reserve's two-day policy meeting in Washington.
Traders have fully priced-in a quarter point rate hike from the Fed, which wraps-up its discussions tomorrow with a 2:00 pm Eastern time decision, but remain largely unconvinced that Chairman Jerome Powell will follow through with his pledge to deliver further increases in the Fed Funds rate over the final months of the year.
That's giving stocks some solid runway for recent gains, with the Dow Jones Industrial Average riding its longest consecutive-session winning streak since 2017 and the S&P 500 now up more than 18% for the year.
A stern test to that rally, however, could come at the close of today's session, with earnings from Microsoft and Google parent Alphabet, and from big tech cohorts Meta Platforms and Amazon later in the week.
With around 89 S&P 500 companies reporting so far, collective earnings are on pace to fall 7.9% from last year to a share-weighted $429.8 billion, with a modest 0.8% rebound forecast for the three months ending in September.
Overnight reports from China suggesting an elite group of the country's to politicians agreed to apply "forceful" stimulus to revive growth prospects in the world's second-largest economy gave stocks in Asia a boost, but the lack of specific details meant the optimism wasn't able to carry over into the European session.
In the U.S., 2-year Treasury notes nudged higher, to 4.87%, following a disappointing auction of $42 billion in new paper yesterday that saw weakened demand from both domestic and foreign investors.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.12% higher at 101.463.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 were indicating a 7 point opening bell gain while those linked to the Dow Jones Industrial Average were priced for a 12 point move to the downside. Nasdaq futures were up 70 points.
The Europe-wide Stoxx 600 was marked 0.27% higher in early Frankfurt trading while Britain's FTSE 100 gained 0.15% in London.
Overnight in Asia, the region-wide MSCI ex-Japan index surged 1.9% into the close of trading following reports of stimulus from Beijing, while the Nikkei 225 was marked 0.06% lower in Tokyo at 32,682.51 points.
2. -- General Motors Higher Ahead of Q2 Update Amid Demand Boost
General Motors (GM) -) shares moved higher in pre-market trading ahead of the carmaker's second quarter earnings expected before today's opening bell.
General Motors, which has experienced solid demand for its cars and trucks this year, reported a 19% increase in overall June quarter sales earlier this month, shifting around 692,000 units, well ahead of the 531,662 sold by its smaller rival Ford Motor F.
Analysts expect GM to post an adjusted bottom line of $1.85 per share, nearly two-thirds higher than last year's tally, with revenues rising 19.2% to $42.64 billion.
Earlier this spring, CEO Mary Barra forecast full-year adjusted net income in the region of $10.5 billion to $12.5 billion, with earnings in the range of $6 to $7 per share, citing "strong demand and improved supply chain conditions."
General Motors shares were marked 1.22% higher in pre-market trading to indicate an opening bell price of $39.78 each.
3. -- General Electric Earnings On Deck As Spin-Off Plans Advance
General Electric (GE) -) shares edged lower in pre-market trading ahead of the industrial group's second quarter earnings prior to the opening bell.
General Electric, which spun out its healthcare division earlier this year following the separation of its main business units -- energy, healthcare and aviation -- is expected to post an adjusted bottom line of 46 cents per share on revenues of $15 billion.
The figures aren't directly comparable to last year's totals given that GE spun-off GE Healthcare Technologies through a Nasdaq listing in early January. The group is also planning to separate its energy business, which will be called GE Vernova, through a tax-free deal sometime in 2024.
Earlier this spring, GE lifted the higher end of its 2023 profit forecast by 40 cents, to between $1.60 to $2.00 per share, and nudged its free-cash flow estimate to a range of between $3.6 billion to $4.2 billion.
General Electric shares were marked 0.15% lower in pre-market trading to indicate a Monday opening bell price of $110.09 each.
4. -- Google To Highlight AI Focus In Q2 Earnings Amid Search Challenge
Google parent Alphabet (GOOGL) -) shares nudged higher in pre-market trading ahead of the ad and tech giant's second quarter earnings expected after the closing bell.
Analysts expect Google to see earnings rise 10.7% from last year to $1.34 per share, with revenues nudging 4.4% higher to $72.8 billion, powered in part by resilient ad sales and its signature non-search platform YouTube.
A move earlier this month to boost the annual price of its premium YouTube offering to U.S. customers by $20, to $139.99 per year, could suggest the company is confident in holding onto users over the current quarter and beyond, and therefore comfortable with the level of ad spending over the three months ending in June.
Google is also expected to leverage its AI potential, and its leadership in online search, as it navigates both a pullback in enterprise spending on cloud services and the uneven recovery in global ad spending. Co-founder Sergey Brin, in fact, has returned to the tech giant to help its AI development as it fends off the strongest challenge yet -- via Microsoft's ChatGPT-powered Bing -- to its Google Chrome dominance.
Google shares were marked 0.6% higher in pre-market trading to indicate an opening bell price of $122.30 each.
5. -- Microsoft To Highlight AI Market Leadership In Q4 Earnings, Outlook
Microsoft (MSFT) -) shares moved higher in pre-market trading as investors prepared for what could be a key quarterly earnings update later today from the world's second-largest tech company.
Microsoft, which is close to concluding its long-delayed $69 billion merger with 'Call of Duty' videogame maker Activision (ATVI) -) after a series of failed court challenges by the Federal Trade Commission, hit an all-time high of $366.78 last week as it continues to ride the wave of AI-related interest following its $30 billion investment in OpenAI earlier this year.
CFO Amy Hood, in fact, said in a recent presentation that generative AI will be "the fastest growing $10 billion business in our history". Others suggest it could be "Windows 95" moment in which Microsoft establishes leadership in "the most transformational technology we have seen since the Internet started to take shape", according to Wedbush analyst Dan Ives.
Analysts expect the group to post a bottom line of $2.55 per share, up 14.3% from last year, on revenues of $55.5 billion for the group's fiscal fourth quarter.
Slowing growth rates in its Intelligent Cloud division, which houses its benchmark Azure product, will likely need to be offset by a robust AI forecast if the stock is to maintain both its year-to-date gain of 43.1% and its current price-to-earnings ratio of 37.3x, nearly twice the level pegged to the S&P 500.
Microsoft shares were marked 0.75% higher in pre-market trading to indicate an opening bell price of $347.71 each.
