The S&P 500 sees marginal gains as investors brace for major tech earnings, a Federal Reserve interest rate decision, and crucial U.S. labor data this week.
The S&P 500 closed with a slight increase after a volatile trading session on Monday, as investors awaited a slew of significant events that could shape market directions. The anticipation surrounds key technology company earnings, a Federal Reserve policy decision on interest rate cuts, and critical U.S. labor data due later in the week.
Tech Giants in the Spotlight
This week, quarterly reports from major technology firms such as Microsoft, Apple, Meta, and Amazon.com are set to be released. These reports are expected to provide insights into whether the recent rallies in technology stocks can be sustained or if they are at risk of a downturn.
Investors are particularly focused on the Federal Reserve’s meeting, which concludes on Wednesday. Many are hopeful that the Fed will signal its readiness to implement a rate cut in September, which could have significant implications for the market.
Adding to the week’s critical economic data, the July nonfarm payrolls report is due on Friday. This report will be scrutinized for signs of any potential weakening in the labor market.
Market Sentiment and Reactions
“Understandably, we’re wavering,” said Mona Mahajan, principal and senior investment strategist at Edward Jones. “Markets are largely in a wait-and-see mode. We have big economic news this week, both the Fed meeting Wednesday and the jobs report on Friday. We also have huge earnings reports coming out of megacap technology.”
Mahajan highlighted that technology megacaps have been leading Wall Street’s record-breaking run, causing some investors to shift their focus to mid- and small-cap stocks. These smaller stocks are expected to benefit from a low-interest-rate environment.
“A lot of investors are keen to see whether the recent rotation we’ve been seeing in the markets has legs, or does megacap technology really kind of shine through in its earnings reports,” Mahajan added.
Despite the cautious optimism, the small-cap Russell 2000 index fell by 1% after experiencing three consecutive weeks of gains.
Mixed Performance Across Indices
The Dow Jones Industrial Average closed down 49.41 points, or 0.12%, at 40,539.93. Meanwhile, the S&P 500 inched up by 4.44 points, or 0.08%, to 5,463.54, and the Nasdaq Composite gained 12.32 points, or 0.07%, to finish at 17,370.20.
Within the S&P 500’s 11 major industry sectors, consumer discretionary stocks provided the biggest boost. Notably, Tesla’s stock rallied after Morgan Stanley included it in its “top pick” list for U.S. autos.
Conversely, the energy sector was the biggest percentage decliner, dropping by 0.9% as oil prices fell.
Notable Stock Movements
Among individual stocks, McDonald’s shares rose by 3.7% following reports that its $5 meal deal, launched in late June, was popular among customers opting for lower-priced items. This led to a surprising drop in sales for the fast-food giant, marking its first decline in 13 quarters.
Abbott Laboratories saw its shares dip by 0.4% after a jury ordered the company to pay $495 million in damages. The trial concluded that Abbott’s formula for premature infants had caused a dangerous illness.
In the cryptocurrency sector, trading was notably volatile. Coinbase Global’s shares fell by more than 3%, while Riot Platforms and Marathon Digital both dropped by over 5%. This decline followed a surge earlier in the day when Bitcoin hit a seven-week high.
As the week progresses, investors will be closely monitoring these developments to gauge the future direction of the market amidst the anticipated economic and corporate news.
