U.S. Stocks May See Further Upside On Optimism About Tech Earnings, Rate Cut

Stocks are likely to move to the upside in early trading on Monday, adding to the strong gains posted last Friday. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 0.6 percent.

Optimism ahead of the release of earnings news from several major technology companies may contribute to early strength on Wall Street.

Microsoft (MSFT), Meta Platforms (META), Apple (AAPL) and Amazon (AMZN) are among the companies due to report their quarterly results this week.

The markets may also continue to benefit from optimism about the outlook for interest rates ahead of the Federal Reserve’s monetary policy meeting this week.

While the Fed is widely expected to leave interest rates unchanged, traders will be looking to the accompanying statement to increase confidence about a rate cut in September.

According to CME Group’s FedWatch Tool, there is currently an 89.6 percent chance the Fed will lower rates by a quarter point in September and a 10.1 percent chance of a half point rate cut.

Later in the week, the focus is likely to shift to the Labor Department’s closely watched monthly jobs report for July.

Following the mixed performance seen in Thursday’s session, stocks moved sharply higher during trading on Friday. The major averages all showed strong moves to the upside, with the Nasdaq and the S&P 500 bouncing off their lowest closing levels in over a month.

The major averages ended the day off their best levels of the session but still firmly in positive territory. The Dow surged 654.27 points or 1.6 percent to 40,589.34, the Nasdaq shot up 176.16 points or 1.0 percent to 17,357.88 and the S&P 500 jumped 59.88 points or 1.1 percent to 5,459.10.

For the week, the Dow advanced by 0.8 percent, but the S&P 500 slid by 0.8 percent and the Nasdaq slumped by 2.1 percent.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan’s Nikkei 225 Index surged by 2.1 percent, while Hong Kong’s Hang Seng Index jumped by 1.3 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is down by 0.5 percent, the German DAX Index is up by 0.2 percent and the U.K.’s FTSE 100 Index is up by 0.8 percent.

In commodities trading, crude oil futures are falling $0.29 to $76.87 a barrel after tumbling $1.12 to $77.16 a barrel last Friday. Meanwhile, after jumping $27.50 to $2,381.00 an ounce in the previous session, gold futures are rising $8.40 to $2,389.40 an ounce.

On the currency front, the U.S. dollar is trading at 153.88 yen versus the 153.76 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0817 compared to last Friday’s $1.0856.