July 29 2024: U.S. stock futures rose at the start of a week filled with significant central bank meetings, including the Federal Reserve, and earnings reports from major tech companies. Apple is taking a deliberate approach to incorporating artificial intelligence features into its key products, while the European corporate earnings season continues.
- Fed Leads Central Bank Agenda This Week
The focus this week is on central banks, with the Federal Reserve, the Bank of England, and the Bank of Japan all set to hold policy meetings.
The Fed concludes its July policy meeting on Wednesday and is widely expected to maintain its benchmark overnight interest rate in the current 5.25%-5.50% range, as it has done since last July.
However, markets are largely anticipating a September rate cut, especially after Friday’s personal consumption expenditures price index, the Fed’s favored inflation gauge, indicated easing prices.
Thus, the statement from Fed Chair Jerome Powell will be closely analyzed for any hints of a rate cut at the next meeting.
The Bank of Japan concludes its latest policy setting meeting on Wednesday, with rising speculation about a possible rate hike despite a fragile economy and weak consumer sentiment.
The Bank of England meets on Thursday amid uncertainty over whether policymakers will deliver their first rate cut since 2020. Last month, the BoE’s Monetary Policy Committee voted 7-2 to keep rates on hold, but this decision is expected to be more finely balanced due to higher-than-expected service price inflation and weak growth.
- Futures Rise Ahead of Fed Meeting, Earnings
U.S. stock futures edged higher on Monday at the start of a week dominated by the Federal Reserve meeting and several key corporate earnings reports.
By 04:05 ET (08:05 GMT), Dow futures were up 60 points, or 0.2%, S&P 500 futures increased by 12 points, or 0.2%, and Nasdaq 100 futures rose by 70 points, or 0.4%.
The major indices slipped last week, with the Nasdaq Composite particularly hit hard by a tech sell-off.
Big Tech earnings are set to continue this week, with Microsoft reporting on Tuesday, followed by Meta on Wednesday, and Apple and Amazon on Thursday.
Disappointing earnings reports could reignite concerns that led to last week’s sell-off, with the Nasdaq experiencing its worst day since late 2022 on Wednesday.
- Apple’s AI Plans Progress Slowly
Apple is taking longer than expected to integrate its recently unveiled artificial intelligence features, known as Apple Intelligence, into its flagship iPhone and iPad devices. According to Bloomberg, these features will not be included in the initial software updates in September but should be available in October updates.
Apple had announced new AI-powered features for its devices in June, hoping to leverage the growing demand for AI to offset slowing iPhone sales.
Apple is set to report its June quarter earnings later this week, and is expected to show continued declines in device sales amid increased competition and market saturation.
- Heineken Writes Down Value of Chinese Investment
The European second-quarter earnings season continues, with Heineken shares dropping 7% after the world’s second-largest brewer missed half-year estimates and announced a significant impairment, writing down the value of its 40% stake in China Resources Beer.
Despite this, Heineken raised its full-year profit forecast, expecting organic operating profit growth of between 4% and 8% in 2024, compared to its previous guidance of low to high single-digit growth.
Philips stock rose 10% after the Dutch medical device maker reported better-than-expected second-quarter results, boosted by higher earnings, the implementation of its restructuring program, and insurance income related to its Respironics product liability claims.
Pearson shares fell 3.5% after the educational publisher reported a drop in pretax profit compared to the previous year, although the company stated it is on track to meet full-year expectations.
- Crude Prices Rise Amid Middle East Tensions
Crude prices increased on Monday due to concerns about escalating conflict in the Middle East, which could impact global supply following a deadly rocket strike in the Israeli-occupied Golan Heights.
By 04:05 ET, U.S. crude futures (WTI) rose 0.1% to $77.20 a barrel, while Brent crude increased 0.1% to $80.38 a barrel.
The weekend’s strike reportedly killed at least 12 people and has been attributed to Iran-backed Hezbollah by both Israel and the U.S., although Hezbollah has denied responsibility.
Israel has vowed retaliation against Hezbollah in Lebanon, and Israeli jets targeted areas in southern Lebanon on Sunday.
These rising tensions are also seen as reducing the chances of a ceasefire between Israel and Hamas, despite recent momentum toward a ceasefire in Gaza.
However, gains in crude prices are limited by the bleak outlook for global demand.