Traders work on the floor of the New York Stock Exchange during afternoon trading on January 22, 2024 in New York City. Both the Dow Jones and S&P hit all-time highs, with the Dow Jones closing above 38,000 points for the first time ever as stocks continued to rise.
Michael M. Santiago | Getty Images News | Getty Images
U.S. stock futures fell across the board on Sunday evening as Wall Street awaited multiple earnings reports from mega-cap tech companies and the Federal Reserve's interest rate decision.
Futures tied to the Dow Jones Industrial Average fell 88 points, or 0.2%. S&P 500 and Nasdaq 100 futures fell 0.2% and 0.3%, respectively.
The three major averages all rose in the past trading week on encouraging economic data. Economic growth was stronger than expected in the fourth quarter, while core inflation was lower on an annual basis than economists expected, suggesting a slowdown in price increases. However, market gains were more muted compared to the previous week's rally after big-name companies like Intel and Tesla disappointed on the earnings front.
This week marks the busiest week of earnings season, with 19% of the S&P 500 reporting profits. Big tech companies Microsoft, Apple, Meta, Amazon and Alphabet – part of the core group of big tech companies that led this year's rally – will release their results. Investors will also keep an eye on Dow components like Boeing and Merck.
Meanwhile, the Federal Open Market Committee will begin its two-day policy meeting on Tuesday. Investors are almost certain that the central bank will keep interest rates stable. According to CME Group, traders in the Fed funds futures market estimated a nearly 97% chance that the Fed will not cut interest rates at the upcoming meeting.
Sonu Varghese, global macro strategist at Carson Group, believes: “The Fed no longer really needs to worry about a hot economy fueling inflation, because we are literally seeing the opposite. The economy is running above trend and inflation is falling. “Based on that we are overweight stocks in terms of portfolio allocation.”
Of course, he added that while the Fed will cut interest rates later this year, “which may result in some capital appreciation, [it will] probably not be as much as the market expects.