S&P 500 and Nasdaq 100: Microsoft, Meta Earnings in Focus as Fed Data Looms

Stock Futures Rise as Key Tech Earnings and Economic Data Drive Market Sentiment

U.S. stock futures rose Monday, with the Nasdaq Composite set for potential new record highs as investors anticipate quarterly earnings from major tech companies, while easing geopolitical concerns add to positive sentiment. Israel’s weekend airstrikes on Iran avoided oil and nuclear sites, reducing fears of an oil price surge. Dow Jones Industrial Average futures rose 0.2% (gaining 102 points), while S&P 500 and Nasdaq 100 futures gained 0.4% and 0.5%, respectively.

The Nasdaq’s recent strength is notable, achieving its seventh consecutive positive week, while both the Dow and S&P 500 ended six-week winning streaks. With tech earnings and key economic data due, traders hope for momentum from tech to support broader markets.

Big Tech Earnings in Focus

This week, five of the “Magnificent Seven” — Alphabet, Microsoft, Meta Platforms, Amazon, and Apple — report earnings, with investors focused on AI spending as a growth driver. Yung-Yu Ma, Chief Investment Officer at BMO Wealth Management, noted that markets expect continued AI investment, and any signal of reduced spending could dampen sentiment.

Alphabet’s earnings on Tuesday may provide insights on AI’s role in search and advertising, with positive guidance likely supporting broader tech optimism. Microsoft’s Wednesday report is anticipated to highlight growth in AI-powered cloud services, while Meta’s earnings could showcase new monetization strategies for its AI products, including the Ray-Ban Meta AI glasses, which may influence digital engagement revenue projections.

Key Economic Data and Fed Outlook

Crucial economic data this week could shape Federal Reserve policy expectations. Reports include the September PCE price index on Thursday, third-quarter GDP on Wednesday, and October’s jobs report on Friday. Analysts forecast a 0.3% rise in core PCE prices, signaling moderate inflation. Q3 GDP is expected to show 3% growth, in line with the Fed’s “soft landing” goals, while the October jobs report may reflect slowing job growth, potentially alleviating inflation concerns tied to wage pressures.

These indicators will be closely watched as traders assess the likelihood of the Fed holding rates steady in November, with markets currently projecting a 96% probability of no rate hike.

Sector Insights: Consumer, Healthcare, and Energy Earnings

In addition to tech, earnings from consumer and healthcare sectors may provide insight into economic resilience. Reports from Visa and McDonald’s could reveal trends in consumer spending, while healthcare giants Pfizer and AbbVie are expected to offer updates on sector stability. On Friday, ExxonMobil and Chevron report earnings, offering a view on energy demand and potential inflation impacts should oil prices remain volatile.

Market Forecast

This week’s tech earnings and economic reports are likely to drive volatility. Strong results from Big Tech, especially regarding AI, could fuel further gains for the Nasdaq. However, weak reports from Apple or Amazon could temper optimism, particularly if economic data show persistent inflation. Positive signals from consumer and healthcare sectors may strengthen confidence, while elevated energy prices could reignite inflationary concerns.

In summary, investors will closely monitor Big Tech earnings and economic data to gauge market direction, with an optimistic outlook for tech but potential caution in inflation-sensitive areas like energy.