NEW YORK (AP) — U.S. stocks were volatile Monday ahead of a week in which Wall Street’s most influential stocks will show whether the huge expectations built against them are justified.
In morning trading, the S&P 500 was almost unchanged. As of 10:35 a.m. ET, the Dow Jones Industrial Average was down 21 points, or 0.1%, while the Nasdaq Composite was up 0.1%.
Big tech stocks are a key reason the S&P 500 has soared more than 35% since fall two years ago, a record high. A handful of seven stocks have accounted for most of the index’s returns over this period, driven by the buzz around artificial intelligence technology and hopes for continued dominance.
Five members of the so-called Magnificent Seven – Apple, Alphabet, Amazon, Meta Platforms and Microsoft – are scheduled to report their latest quarterly profits this week.
Because these stocks are much larger than nearly every other stock, their movements are weighted much more heavily in the S&P 500 and other indexes. The company needs to meet analysts’ growth expectations to justify its recent big moves.
That’s not all we have planned for this week.
on wednesday, The Fed will make the latest decision Regarding what to do about interest rates. Traders expect no policy action, but hopes are rising that a rate cut could be made at the bank’s next meeting in March. This will be the first rate cut since the Fed began significantly raising interest rates two years ago to curb high inflation.
A wave of encouraging data has Wall Street believing the dream scenario is coming true. That means the Fed will successfully combat inflation and soon deliver the interest rate cuts investors crave, while the economy will survive without falling into the recession that seemed inevitable last year.
Friday’s economic report may strengthen or weaken confidence in that dream. The government is due to release its latest monthly update on the jobs market, with economists expecting employment to continue to rise but at a slower pace. This is exactly what the Fed wants, since too much growth could mean upward pressure on inflation.
“This week could be key,” said Chris Larkin, managing director of trading and investments at Morgan Stanley’s E-Trade. “For the market to maintain its recent strength, it will need to avoid disappointment with big tech’s results this week, get some encouraging news on interest rates from the Fed, and see solid but less-than-hot jobs data. Might happen.”
This earnings reporting season is expected to be lackluster, with analysts predicting that S&P 500 companies’ earnings per share will decline for the fourth time in the past five quarters. But without the Magnificent Seven, the situation would be even worse.
Facebook’s parent company Meta Platforms is expected to be the single biggest contributor to overall S&P 500 growth, according to FactSet. Nvidia follows closely, followed by Microsoft, Apple, Alphabet, and Amazon.
So far this earnings season, stocks have not risen as much as in previous years, even though companies have beat analyst estimates.
Investment manager Franklin Resources fell 0.4% despite reporting better-than-analyst-expected profits and sales in its latest quarter.
SoFi Technologies’ performance was strong, with shares rising 21.7% after the financial services company reported stronger financial results for the last three months of 2023 than analysts expected. The company’s profit outlook for next year also exceeded analysts’ expectations.
On the losing side of Wall Street, i robot The stock fell 10.2% after Amazon agreed to halt its acquisition following scrutiny from antitrust regulators.
Shares of oil and gas companies fell as oil prices fluctuated on concerns about violence in the Middle East.
president joe biden The United States said on Sunday it would “respond” to a drone attack in Jordan that killed three American soldiers and injured more than 25 others.Biden denounces Iran-backed militia It was the first American death since the start of the war, following months of attacks by such groups on U.S. forces across the Middle East. israel-hamas war.
Brent crude oil, the international standard, rose above $83 per barrel in the morning, but has since fallen 1.3% to $81.91. Benchmark U.S. crude oil fell 1.4% to $76.88 per barrel.
Monday began with a Hong Kong court order decision. China Evergrande liquidation, the world’s most indebted real estate developer. Following the ruling, Chinese markets were mixed, with Hong Kong stocks rising and Shanghai stocks falling.
Chinese authorities also moved to make it more difficult for some investors to “short sell” Chinese stocks, or bet on falling prices. China’s stock market is at the world’s worst level so far this year, due to concerns not only about the troubled real estate industry but also about the weakness of the economic recovery.
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AP writers Matt Ott and Zimo Zhong contributed.