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Stocks gained on Monday as investors awaited the start of a major week of earnings and a key policy decision from the Federal Reserve.
The Nasdaq Composite (IXIC) led the charge higher, rising nearly 0.5%. The S&P 500 (GSPC) rose almost 0.4%, while the Dow Jones Industrial Average (DJI) climbed nearly 0.3%, or more than 80 points, after edging out its tenth consecutive win on Friday.
Earnings season kicks into high gear this week, with over 150 S&P 500 businesses reporting. The Nasdaq was driven down by second-quarter earnings from Tesla (TSLA) and Netflix (NFLX) last week, so all eyes are on Microsoft (MSFT), Alphabet (GOOGL), and Meta (META).
Investors are also anticipating the Fed’s interest rate decision at the conclusion of its policymaker meeting on Wednesday, which is largely expected to result in an increase. The big question is whether the Fed remains hawkish and signals more rate hikes are on the way, and what that means for the chances of the US economy escaping a recession.
– AMC stock surges when a court orders a halt to stock conversion.
AMC stock (AMC) rose approximately 20% on Monday morning after a court judgement blocked AMC’s attempt to convert AMC preferred equity shares (APE) into normal AMC shares, while the theater operator had its busiest weekend in four years.
According to the business, the opening weekend of “Barbie” and “Oppenheimer” drew more than 7.8 million moviegoers to AMC-operated theaters. Saturday was the theater chain’s largest single-day attendance since July 2019, while food and beverage revenue reached its second-highest daily total ever.
Following a Delaware court judgement on AMC’s share conversion, the stock was already moving after hours on Friday. In March, shareholders authorized the conversion of APE units into AMC common stock pending a Delaware court verdict.
“Part of what swayed the judge was the nearly 3,000 individuals who sent in letters to sway the opinion, presumably out of concern for further share dilution,” Alicia Reese, vice president of equity research at Wedbush, wrote in a note on Monday morning.
– Services growth slows, as manufacturing declines.
The first look at activity in the US economy’s services and manufacturing sectors in July, released Monday morning by S&P Global, revealed that the manufacturing slowdown is easing but growth in the service sector remains weak.
The flash Services PMI of S&P Global dipped to 52.4 in July, a five-month low, while the flash Manufacturing PMI jumped to 49.0, a three-month high. In these measurements, values over or below 50 signify the breakeven point for growth or expansion.
With the services sector, which has accounted for all of the growth in the US economy in recent months, decreasing and the manufacturing sector continuing to decrease, S&P’s Chris Williamson’s take on these statistics was unsurprisingly gloomy.
“July is seeing an unwelcome combination of slower economic growth, weaker job creation, gloomier business confidence, and sticky inflation,” said Williamson, S&P Global Market Intelligence’s chief business economist.
And, in Williamson’s opinion, this data is yet another reminder that forecasts, which have pushed out the timeframe for — or chance of — a US recession, do not eliminate these dangers.
“Business optimism about the year ahead has plummeted to its lowest level this year,” Williamson added. “The bleak picture adds downside risks to output growth in the coming months, which, together with the slowing pace of expansion in July, will keep alive the fear that the US economy will succumb to another downturn before the end of the year.”
“July is seeing an unwelcome combination of slower economic growth, weaker job creation, gloomier business confidence, and sticky inflation,” said Williamson, S&P Global Market Intelligence’s chief business economist.
And, in Williamson’s opinion, this data is yet another reminder that forecasts, which have pushed out the timeframe for — or chance of — a US recession, do not eliminate these dangers.
“Business optimism about the year ahead has plummeted to its lowest level this year,” Williamson added. “The bleak picture adds downside risks to output growth in the coming months, which, together with the slowing pace of expansion in July, will keep alive the fear that the US economy will succumb to another downturn before the end of the year.”
Finally, Williamson observes that the pricing commentary in these papers shows that slipping below 3% inflation in the next months may be “elusive.”
– Stocks rise ahead of earnings, Fed decision
Stocks began higher on Monday, ahead of another week of earnings and a major Federal Reserve policy decision.
The S&P 500 (GSPC) gained 0.4%, while the Dow Jones Industrial Average (DJI) gained 0.3%. The Nasdaq Composite (IXIC), which is heavily weighted toward technology, gained 0.5%.
– Stock futures are rising, with the Nasdaq leading the way.
The major US market indexes rose ahead of the opening bell on Monday, as investors braced themselves for a hectic week of corporate earnings and central bank announcements.
The Nasdaq 100 futures were up 0.25%, or over 40 points, while the S&P 500 (GSPC) futures were up 0.19%. Contracts on the Dow Jones Industrial Average (DJI) rose 0.14% as the benchmark recorded its tenth consecutive victory on Friday.
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