Wall Street Remains On Track For AMD-Led Rebound Ahead Of Fed Decision, Meta Earnings: Analyst Says 'The Bull Tends To Remain' Despite Near-Term Volatility

Author: Shanthi Rexaline | July 31, 2024 07:55am

Tech optimism is likely to abound on Wall Street as AI-levered stocks are feeding off the strength generated by Advanced Micro Devices, Inc.‘s (NASDAQ:AMD) robust second-quarter results. The major index futures are all sharply higher early Wednesday. The financial markets have baked in expectations of the Federal Reserve, led by Chairman Jerome Powell, to confirm a September rate cut. Bond yields are dropping and the dollar-denominated commodities are rising as the U.S. dollar trades lower against most major currency pairs.

The beaten-down mega-cap techs could lead the market higher, as evidenced in the premarket session. Microsoft Corp. (NASDAQ:MSFT) did stir up some nervousness but analysts are largely sanguine about continued AI strength for the company, basing the optimism on the strong commercial cloud bookings.

Futures	Performance (+/-)
Nasdaq 100	+1.52%
S&P 500	+0.99%
Dow	+0.30%
R2K	+0.74%

In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) moved up 0.95% to $547.16, and the Invesco QQQ ETF (NASDAQ:QQQ) jumped 1.52% to $464.48, according to Benzinga Pro data.

Cues From Last Session:

U.S. stocks ended Tuesday’s session on a mixed note after traders sold off tech stocks amid some disappointing earnings and apprehensions ahead of some mega-cap tech earnings. Traders also chose to remain cautious ahead of the Fed decision.

The major averages opened uniformly higher but diverged thereafter. The Dow Industrials stayed mostly in the green, moving roughly sideways and ending moderately higher. The 30-stock blue-chip average drew strength from the support lent by healthcare and financial stocks.

The Nasdaq Composite and the S&P 500 Index squandered their early gains ahead of earnings reports from Microsoft and AMD and declined steadily through the morning. After bottoming by the mid-session, these averages moved roughly sideways before closing notably lower.

Financial stocks rallied on Fed rate cut expectations and energy stocks gained on BP Plc.’s (NYSE:BP) quarterly earnings, while IT stocks served as drags.

Index	Performance (+/-)	Value
Nasdaq Composite	-1.28%	17,147.42
S&P 500 Index	-0.50%	5,436.44
Dow Industrials	+0.50%	40,743.33
Russell 2000	+0.35%	2,243.14

Insights From Analysts:

Weighing in on the recent market weakness, Carson Group Chief Investment Strategist Ryan Detrick said some more volatility would be perfectly normal. Since most of the year so far has been historically calm, the strategist said large moves cannot be ruled out. “When you go at least a full year without a 2% drop and then finally have one, the bull tends to remain. In fact, up a median of more than six percent three months later and up more than 10% on average a year later don't sound all too bearish to me,” he said.

He noted that the S&P 500 Index went without a 2% drop for 356 days since February 2023, the longest such streak since the record 949 days before the Great Financial Crisis.

Upcoming Economic Data:

• ADP is due to release its private payroll numbers at 8:15 a.m. EDT. Economists, on average, expect that the sector may have added 150,000 jobs in July, the same pace as in the previous month.
• The Labor Department will release its second-quarter employment cost index at 8:30 a.m. EDT, with the consensus 1% quarter-over-quarter increase in compensation cost following a 1.2% increase in the first quarter.
• The ISM-Chicago is due to release the results of its regional manufacturing activity data for July at 9:45 a.m. EDT. The Chicago region’s business barometer for July may have declined from 47.4 in June to 45.5 in July, suggesting a steeper contraction.
• The National Association of Realtors will announce its pending home sale index for June at 10 a.m. EDT. Pending home sales may have increased 1% month-over-month following a 2.1% drop in the previous month.
• The Energy Information Administration will release its weekly petroleum status report at 10:30 a.m. EDT.
• The Fed will announce its interest rate decision via the post-meeting policy statement at 2 p.m. EDT. Economists widely expect another pause but traders will watch out for any change in the language that could add weight to expectations for a rate cut in September. Powell’s post-meeting presser is due for 2:30 p.m. EDT.

See Also: How To Trade Futures

Stocks In Focus:

• AMD climbed over 9% in premarket trading following the chipmaker’s quarterly results.
• The other stocks moving on earnings are Arista Networks, Inc. (NYSE:ANET) (up over 4%), Caesars Entertainment, Inc. (NASDAQ:CZR) (up over 6%), DoubleVerify Holdings, Inc. (NYSE:DV) (down about 6%), First Solar, Inc. (NASDAQ:FSLR) (up over 4%), Freshworks Inc. (NASDAQ:FRSH) (up over 5%), Match Group, Inc. (NASDAQ:MTCH) (up about 11.5%), Microsoft (down over 2.50%), Pinterest, Inc. (NYSE:PINS) (down over 11%) and Starbucks Corporation (NASDAQ:SBUX) (up over 2.7%).
• Altria Group, Inc. (NYSE:MO), AutoNation, Inc. (NYSE:AN), Barrick Gold Corporation (NYSE:GOLD), Bausch + Lomb Corporation (NYSE:BLCO), Boeing Company (NYSE:BA), DuPont de Nemours, Inc. (NYSE:DD), Garmin Ltd. (NYSE:GRMN), GSK plc (NYSE:GSK), Humana Inc. (NYSE:HUM), KKR & Co. Inc. (NYSE:KKR), Kraft Heinz Company (NASDAQ:KHC), Oshkosh Corporation (NYSE:OSK), Teva Pharmaceutical Industries Limited (NYSE:TEVA), Marriott International, Inc. (NASDAQ:MAR), Wingstop Inc. (NASDAQ:WING), Penumbra, Inc. (NYSE:PEN) (down over 20%), T-Mobile US, Inc. (NASDAQ:TMUS) and Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) are among the key companies due to release their earnings reports ahead of the market opening.
• Those reporting after the close include Albemarle Corporation (NYSE:ALB), American International Group, Inc. (NYSE:AIG), Arm Holdings plc (NASDAQ:ARM), C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), Carvana Co. (NYSE:CVNA), eBay Inc. (NASDAQ:EBAY), Etsy, Inc. (NASDAQ:ETSY), Host Hotels & Resorts, Inc. (NASDAQ:HST), Lam Research Corporation (NASDAQ:LRCX), Meta, MGM Resorts International (NYSE:MGM), NETGEAR, Inc. (NASDAQ:NTGR), QUALCOMM Incorporated (NASDAQ:QCOM), Teladoc Health, Inc. (NYSE:TDOC) and Western Union Company (NYSE:WU).
• Vistra Corp. (NYSE:VST) soared over 13% after the company announced a license extension for its 2.4GW Comanche Peak nuclear power plant, allowing operations to continue until 2053.

Commodities, Bonds And Global Equity Markets:

Crude oil futures rebounded strongly and gold futures extended gains ahead of the Fed meeting. The yield on the 10-year Treasury note slipped to 4.133%. Bitcoin (CRYPTO: BTC) pulled back below the $66K level.

The global markets exuded cheer, taking heart from some positive U.S. tech earnings as well as some domestic data and earnings. Japan’s Nikkei 225 average rose after the Bank of Japan raised interest rates to 0.25%, while also announcing a bond tapering plan. The Chinese markets rallied strongly after lackluster domestic data raised stimulus hopes.

European stocks were notably higher in early trading as domestic traders digested the earnings news flow and inflation data from the eurozone, which unexpectedly accelerated.

Read Next:

• Apple, Amazon, Microsoft, Meta Lead The Charge As Investors Bank On Tech Cheer For Rally’s Reacceleration: Week Ahead In Earnings

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