Wednesday July 31st

31-07-2019

Stock futures rise after big Apple earnings beat, investors await Fed decision

U.S. stock index futures rose on Wednesday as Wall Street cheered strong quarterly results from tech giant Apple while while awaiting the Federal Reserve’s latest monetary policy decision.  Around 7:30 a.m. ET, Dow Jones Industrial Average futures traded 72 points higher, indicating a gain of 67 points at the open. S&P 500 and Nasdaq 100 futures also pointed to a higher open. Apple reported Tuesday evening earnings per share and revenue for the previous quarter that topped analyst expectations, sending the stock up more than 4% in the premarket. The company also issued better-than-expected revenue guidance for the fourth quarter. “Overall, when we consider AAPL’s valuation with the company’s fundamental levers for further EPS upside, we see a balanced reward profile relative to the risks,” said Jeriel Ong, an analyst at Deutsche Bank, in a note. Ong added Apple’s “stabilizing” trends will likely give investors more confidence. General Electric shares also rose 4% before the bell on better-than-expected earnings. The company’s outlook for industrial cash flow also topped estimates. Nearly 60% of S&P 500 companies have reported earnings so far. Of those companies, 76% have posted stronger-than-forecast quarterly profits, according to FactSet. The U.S. central bank is widely expected to cut interest rates for the first time since the financial crisis more than a decade ago. Market expectations point to a quarter-point rate cut. The Fed is set to deliver its decision at 2 p.m. ET, with Chairman Jerome Powell scheduled to hold a press conference at 2:30 p.m. ET. The projected move from the Fed has supported risk asset prices worldwide in recent days. However, trade war concerns have resurfaced to cap gains. President Donald Trump said in a series of tweets Tuesday that Beijing is not keeping its promise of buying more U.S. agricultural products, decreasing hope that the world’s two largest economies could soon reach a trade deal. China insists it has bought U.S. agricultural products. Washington and Beijing agreed to restart trade talks late last month after they fell through in May. The two countries have been engaged in a trade war since last year. In that time, they’ve slapped tariffs on billions of dollars’ worth of each other’s goods. Companies added more jobs than expected in July amid concerns that the U.S. economy was slowing and the labor market was nearing full employment. Private payrolls increased by 156,000 for the month, according to a report Wednesday from ADP and Moody’s Analytics that beat Dow Jones estimates of 150,000. The number was an increase from the 112,000 in June, revised higher from the initially reported 102,000. Stocks in Asia slipped on Wednesday as investors awaited the U.S. Federal Reserve’s announcement of its decision on interest rates. Meanwhile, markets in Hong Kong closed early as the city braces itself for a tropical storm. The Nikkei 225 in Japan slipped 0.86% to close at 21,521.53. The Topix index also fell 0.66% to end its trading day at 1,565.14. Mainland Chinese stocks slipped on the day, with the Shanghai compositeshedding 0.67% to 2,932.51 and the Shenzhen component falling 0.77% to 9,326.61. The Shenzhen composite also declined 0.681% to 1,571.30. In Hong Kong, the Hang Seng index closed early for the day as a tropical cyclone signal was raised to its third highest level. The index fell 1.31% to 27,777.75. South Korea’s Kospi closed 0.69% lower at 2,024.55. Oil prices rose for a fifth day on Wednesday, supported by a drop in U.S. inventories and investor expectations that the U.S. Federal Reserve will lower borrowing costs for the first time since the financial crisis more than a decade ago. Brent crude futures, the international benchmark for oil prices, were up 42 cents, or 0.6%, at $65.14 a barrel. U.S. West Texas Intermediate crude gained 40 cents, or 0.7%, to $58.45 a barrel. For the month, however, both contracts were set to decline due to worries about oil demand, with Brent down 2.1% and WTI 0.03% lower. Gold held steady on Wednesday, on track for a third straight month of gains, as traders awaited a U.S. Federal Reserve statement that is widely expected to signal an interest rate cut. Spot gold was flat at $1,430.74 per ounce, while U.S. gold futures edged 0.14% higher to $1,437.80 an ounce.