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Traders work on the floor of the New York Stock Exchange during afternoon trading on January 22, 2024 in New York City. As stock prices continued to rise, both the Dow Jones and S&P hit record highs, with the Dow Jones closing above 38,000 points for the first time in history.
Michael M. Santiago | Getty Images News | Getty Images
U.S. stock futures fell across the board Sunday night as Wall Street focused on earnings reports from some of the biggest tech companies and the Federal Reserve’s interest rate policy decisions.
Futures, which track the Dow Jones Industrial Average, fell 88 points, or 0.2%. S&P 500 futures and Nasdaq 100 futures fell 0.2% and 0.3%, respectively.
All three major averages rose due to last week’s strong economic indicators. Economic growth in the fourth quarter was stronger than expected, but core inflation for the year was lower than economists expected, suggesting that price rises are slowing. However, the market’s gains slowed compared to the previous week’s gains after big-name companies such as Intel and Tesla disappointed on the earnings front.
This week was the busiest week of earnings season, with 19% of the S&P 500 reporting earnings. Big tech companies such as Microsoft, Apple, Meta, Amazon and Alphabet, part of the core group of tech giants that have led this year’s stock market rally, are scheduled to report earnings. Investors will also be keeping an eye on Dow constituents such as Boeing and Merck.
Meanwhile, the Federal Open Market Committee begins a two-day policy meeting on Tuesday. Investors are almost certain the central bank will keep interest rates unchanged. Traders in the federal funds futures market believe there is a nearly 97% chance the Fed will not cut rates at its next meeting, according to CME Group.
“The Fed no longer needs to worry about an overheating economy fueling inflation, because we are literally seeing the opposite,” said Sonu Varghese, global macro strategist at Carson Group. .We believe the economy is running above trend and inflation is falling.” In terms of portfolio allocation, that means we’re overweight stocks. ”
To be sure, the Fed is likely to cut interest rates later this year, but “perhaps it could lead to higher capital prices; [it will] Probably not as much as the market expects. ”
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