The Dow rose on Monday as investors braced for a Federal Reserve meeting during the week and earnings of some of the biggest companies to cushion the impact of a stronger dollar and rising inflation, while the Nasdaq dipped on a decline in Microsoft.
Apple Inc, Amazon.com Inc, Alphabet Inc, Microsoft Corp and Meta Platforms Inc, which account for $8.9 trillion in market capitalization, or a quarter of the benchmark index’s weightage, are scheduled to post earnings this week.
“A really big part of the earnings season is here,” said Dennis Dick, retail trader at Triple D Trading. could.”
Shares of high-growth companies were mixed in the first hour of trading.
Microsoft fell 0.5% after Wells Fargo cut its price target, citing risks to inflation, rising rates and a stronger dollar on earnings.
The dollar is hovering near a 20-year high after an aggressive tightening cycle by the Fed, seen as a headwind for US companies, especially those with large global operations.
All three major indices closed higher last week. The tech heavy Nasdaq gained 3.3%, the S&P 500 gained 2.4% and the Dow gained 2%.
The Fed is widely expected to deliver another super-sized 75 basis-point rate hike at the end of its two-day monetary policy meeting on Wednesday, effectively ending pandemic-era support for the US economy .
The press conference by Chair Jerome Powell will also be looked at for clues on policymakers’ thinking on future rate hikes amid concerns over aggressive tightening that could propel the economy into recession.
“We expect Powell to remind us that the 75 bps increase is unusually large and the funds rate is close to the FOMC’s estimate,” said Paolo Zangieri, senior economist at Generali Investments.
“This, and signs of a physical slowdown of the economy, should tilt the balance to 50 bps growth (in September), followed by another in November and December.”
Futures contracts linked to the US Federal Reserve’s policy rate suggested on Monday that benchmark interest rates would peak in January 2023 compared to February last week.
Meanwhile, advance second-quarter GDP figures on Thursday are likely to turn negative after the US economy contracted in the first three months of the year.
A traditional measure of a recession is two consecutive quarters of GDP contraction, although the group, which is the official mediator of the US recession, looks at a wide range of indicators, including jobs and spending.
At 10:12 a.m. ET, the Dow Jones Industrial Average was up 123.98 points, or 0.39%, at 32,023.27. The S&P 500 was up 5.49 points, or 0.14%, at 3,967.12, while the Nasdaq Composite was down 26.93 points, or 0.23%, at 11,807.19.
Shares of Newmont Corp fell 10% after miners raised their annual cost forecast and missed second-quarter gains, hurt by lower gold prices and inflationary pressures.
Advancing issues declined by a 1.71-to-1 ratio on the NYSE. Issues decline in the number of advances to a 1.07-to-1 ratio on the Nasdaq.
The S&P index recorded a new 52-week high and 29 new lows, while the Nasdaq recorded 19 new highs and 52 new lows.
This story has been published without modification in text from a wire agency feed. Only the title has been changed.
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