The capital markets are gearing up for a big week of earnings reporting, economic data, and central bank policy decisions. That is just what we know will happen. There is always the “unknown factor” working in the background, too.
In any case, what we know at this early stage is that Treasuries are finding a bid, the U.S. Dollar Index is slightly higher, most commodity futures are trading higher, and the equity futures market is not revealing any rush to sell into the gains.
The S&P 500 futures are up seven points and are trading 0.1% above fair value, the Nasdaq 100 futures are up 27 points and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are up 27 points and are trading 0.1% above fair value with the Dow riding a 10-session winning streak.
The equity market, then, will be settling into today’s trade after the opening bell rings, looking to assess if the resilience to selling interest will persist.
Apple (AAPL) is providing some influential support, trading up 0.5% in pre-market action after Deutsche Bank and Wells Fargo raised their price targets to $210 and $225, respectively, as is fellow Dow component Chevron (CVX), which is up 1.0% after saying it sees Q2 EPS above the consensus estimate.
Still, market participants are showing some reserve in general, cognizant that Microsoft (MSFT) and Alphabet (GOOG) will report their June quarter results after the close on Tuesday and that the FOMC meeting will culminate with a policy announcement at 2:00 p.m. ET on Wednesday.
It has been accepted as foregone conclusion that the FOMC will agree to raise the target range for the fed funds rate another 25 basis points to 5.25-5.50%. That rate hike is “in the market” with the CME FedWatch Tool showing a 99.8% probability of such a move.
Where the mystery lies for the market is what Fed Chair Powell will communicate at his press conference and the tone he adopts to communicate it. That will be the ultimate market mover — not the rate hike itself.
On a related note, market rates are moving lower in response to some preliminary July manufacturing and services PMI readings out of the eurozone that showed a continued weakening in business activity.
The eurozone’s preliminary July HCOB Manufacturing PMI checked in at 42.7 (expected 43.5; last 43.4), marking its lowest reading since May 2020 and the thirteenth straight reading in contraction territory (i.e., below 50.0). The July S&P Global Composite PMI reading dropped to 48.9 from 49.9.
The preliminary July S&P Global US Manufacturing PMI and Services PMI readings for the U.S. will be released at 9:45 a.m. ET.
The 2-yr note yield is down three basis points to 4.82% ahead of a $42 billion 2-yr note auction at 1:00 p.m. ET, and the 10-yr note yield is down four basis points to 3.81%.
—
Originally Posted July 24, 2023 – Sitting tight with a big week ahead
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Briefing.com and is being posted with its permission. The views expressed in this material are solely those of the author and/or Briefing.com and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Join The Conversation
If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.