On Monday, US benchmark equity indices presented a mixed performance as investors braced for significant corporate earnings announcements and the latest monetary policy decision from the Federal Reserve, which is scheduled for later this week. The S&P 500 and the Nasdaq Composite both saw slight increases, climbing 0.1% to close at 5,463.5 and 17,370.2, respectively.
Conversely, the Dow Jones Industrial Average experienced a minor decline, dropping 0.1% to settle at 40,539.9. Among sectors, consumer discretionary stocks emerged as the leading gainers, while the energy sector faced the most severe decline. In the spotlight this week are several mega-cap companies, including Apple, Microsoft, Meta Platforms (parent of Facebook), and Amazon.com, all set to release their latest quarterly financial results.
Other notable firms reporting include Intel, Boeing, Pfizer, AMD, and Exxon Mobil. As of now, 206 companies, representing approximately 41% of the S&P 500, have disclosed their earnings for the current reporting cycle, showing a year-over-year earnings increase of 6.5% alongside a revenue growth of 4.1%, according to insights from Oppenheimer Asset Management. In individual company news, ON Semiconductor reported a decline in its fiscal second-quarter results compared to the previous year; however, it surpassed market expectations.
The chipmaker also provided an earnings outlook for the current quarter that aligned with analysts’ midpoint forecasts, leading its shares to surge by nearly 12%, marking it as the top performer on both the S&P 500 and the Nasdaq throughout the session. Meanwhile, shares of McDonald's rose by 3.7%, categorizing it as the leading performer on the Dow.
On an earnings conference call, McDonald’s USA President Joe Erlinger mentioned that nearly 93% of its US restaurants are committed to extending the popular $5 meal deal throughout the summer. Notably, the firm reported second-quarter earnings and revenue figures that fell short of market estimates. Arm Holdings, on the other hand, faced the second-largest decline on the Nasdaq, plummeting 5.1% after HSBC downgraded the stock from hold to reduce, resulting in investor concerns. Enstar Group stocks fell by 6.1% following the announcement of an agreement to be taken private by a consortium led by Sixth Street in a substantial $5.1 billion deal. In the bond market, the US 10-year Treasury yield decreased by 2.8 basis points, reaching 4.17%, while the two-year yield experienced a slight increase of 1.1 basis points to hit 4.4%. All eyes remain on the Federal Open Market Committee, anticipated to unveil its latest monetary policy decision on Wednesday.
Analysts widely expect that the Fed will maintain interest rates in the range of 5.25% to 5.50% for the eighth consecutive meeting. However, with no Summary of Economic Projections expected this month, investors will closely analyze the FOMC statement and tune in to Fed Chair Jerome Powell’s press conference for any hints regarding a potential rate cut in September, as noted by Stifel in a client update. In other economic updates, West Texas Intermediate crude oil prices fell by 1.7%, closing at $75.89 per barrel on Monday.
On the commodities front, precious metals reported slight declines, with gold slipping 0.1% to $2,379.70 per troy ounce and silver following suit, also decreasing 0.1% to settle at $27.99 per ounce. The economic landscape also revealed concerning signs, as Texas manufacturing reported a contraction that deteriorated more than anticipated this month, with both production and shipment levels dipping into negative figures according to the Dallas Fed..