Futures inch up ahead of more megacap earnings, employment data
By Johann M Cherian and Bansari Mayur Kamdar
(Reuters) – U.S. stock index futures edged up on Monday with key benchmarks on track to end July higher, while investors awaited quarterly earnings from more megacap companies and a crucial employment report later this week.
All three main U.S. indexes ended last week higher as signs of cooling inflation and a resilient economy cemented investor bets on a soft landing for the country.
Upbeat quarterly earnings from megacap growth companies such as Alphabet (NASDAQ:GOOGL), Meta Platforms as well as chipmakers Intel (NASDAQ:INTC) and Lam Research (NASDAQ:LRCX) have also boosted investor sentiment.
Second-quarter earnings for S&P 500 companies are now estimated to have fallen 6.4% year-over-year, according to Refinitiv data. While still negative, the forecast is an improvement from the 7.9% drop estimated a week ago.
The blue-chip Dow logged its longest winning streak in nearly four-decades this month, underpinned by gains in sectors including healthcare, financials and energy that had underperformed during the first half of the year.
“Markets are growing increasingly confident that we are approaching the end of the current rate-hike cycle and that a soft landing can be delivered,” said Joshua Warner, market analyst at City Index.
“However, the future path of interest rates and the outlook for earnings both remain at the behest of macroeconomic conditions and data will remain key.”
Investors will parse remarks by Chicago Fed President Austan Goolsbee, a voting member of the Federal Open Market Committee, due later in the day.
Citigroup (NYSE:C) raised its 2023-end and mid-2024 S&P 500 targets to 4,600 and 5,000, respectively, to reflect a higher possibility of a soft landing. The benchmark index closed at 4,582 on Friday.
Investors await quarterly reports from Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN) and AMD later this week, while July ISM Manufacturing reading and three sets of employment data, including July’s non-farm payrolls are also in focus.
At 07:00 a.m. ET, Dow e-minis were up 44 points, or 0.12%, S&P 500 e-minis were up 4.5 points, or 0.1%, and Nasdaq 100 e-minis were up 2.5 points, or 0.02%.
Financial services provider SoFi Technologies (NASDAQ:SOFI) gained 7.2% in premarket trading on reporting better-than-expected quarterly revenue.
Chipmaker ON Semiconductor added 2.2% ahead of its second-quarter results.
Johnson & Johnson (NYSE:JNJ) shed 1.4% after a U.S. judge shot down the drugmaker’s second attempt to resolve tens of thousands of lawsuits over its talc products.
Salesforce (NYSE:CRM) eased 1.7% after Morgan Stanley (NYSE:MS) cut the business software provider’s rating, while UPS slid 1.3% on a downgrade from Credit Suisse.