Tech Earnings Optimism Drives Broader Averages Higher Ahead of Rate Decision This Week

Barry Adams
24 Jul, 2023
New York City

Stocks traded slightly higher in early trading as investors prepare to review a barrage of earnings reports and the Federal Reserve's policy decision later in the week. 

Market averages edged higher as investors await earnings from several companies including Meta, Amazon, Microsoft, and Alphabet. 

About 740 companies are scheduled to release their quarterly results this week, including about 40% of the companies in the S&P 500 index. 

Nine-month long market rally is powered by large gains in a narrow list of stocks, after companies have reported better-than-expected earnings in the last three quarters. 

Investors are looking for clues how far companies can improve earnings and operating margin in the face of a 500 basis points increase in interest rates in the last fifteen months. 

Moreover, according to the Fed's previous announcements the worst of the rate increases are expected to be felt in the current quarter, and investors are awaiting forecasts of revenue and margins for the third quarter of 2023. 

Moreover, the Federal Reserve is scheduled to announce its rate decision on Wednesday, and market participants are factoring at least 25 basis points increase. 

Economists are also looking to understand how high rates are likely to go by the end of this year, in the face of tight labor market conditions.  

The European Central Bank is expected to announce its rate decision on Thursday and the Bank of Japan is also set to announce its policy directive on the yield curve management on Friday. 

 

U.S. Indexes & Yields 

The S&P 500 index traded higher 0.2% to 4,574.26 and the Nasdaq Composite futures edged up 0.1% to 14,098.52. 

The yield on 2-year Treasury notes decreased to 4.83%, 10-year Treasury notes inched lower to 3.80% and 30-year Treasury bonds edged down to 3.89%. 

Crude oil increased $0.55 to $77.62 a barrel and natural gas prices increased a fraction to $2.71 a thermal unit. 

 

Stock Movers 

Domino's Pizza Inc increased 1.8% to $391.20 after the company reported revenue of $1.0 billion and $3.08 a share. 

AMC Entertainment Holding Inc soared 35.7% to $5.95 after a judge disallowed the company's plan to convert its preferred share to common share. 

Preferred units declined 2.2% to $1.90.  

The company said it has proposed a revised conversion plan. 

Ryanair Holdings plc declined 4% to $102.30 after the deep discount airline reported a surge in traffic, revenue and earnings. 

Revenue in the fiscal year 2024 first quarter ending in June increased 40% to Є3.65 billion after passenger count rose 11% to 50.4 million and load factor rose to 95% from 92% from a year ago. 

Profit after-tax soared 290% to Є663 million from Є170 million and earnings per share rose to 58.22 cents from 16.53 cents a year ago.