Stock Market Slips Ahead Of Big Tech Earnings
U.S. stock futures are tilting lower ahead of a barrage of tech stocks earnings. No doubt, the recent Chinese regulatory crackdowns have been weighing on the stock market. The major U.S. stock benchmarks closed Monday’s regular session at record highs to notch a five-day win streak. Shares of Tesla (NASDAQ: TSLA) are trading higher during pre-market trading following a better-than-expected second-quarter earnings report. The EV pioneer passed the $1 billion mark in its quarterly net income for the first time.
Tech stocks have been on the roll with second-quarter earnings reports holding up well. If the recent earnings are any indication, we could be seeing good things ahead for Big Tech. Sure, Alphabet (NASDAQ: GOOGL) has been one of the top performers so far in 2021. GOOGL stock has risen by more than 50% since the start of the year. But if you’re looking to get a large jump in stock price from an earnings beat, Apple (NASDAQ: AAPL) may be the better bet. That’s because AAPL stocks have been in more of a consolidation phase over the last few months.
Certainly, a positive start to the earnings season has helped push stocks to their best five-day streak of gains since March. But volatility returned to the stock market on Monday. This came as some investors remain worried about the pace of economic growth and inflation. And that has caused investors to struggle to find a direction in the stock market today. Dow, S&P 500, and Nasdaq 100 futures were all in the negative territory, moving 0.35% and 0.26% and 0.08% lower respectively at 6:41 a.m. ET.
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Federal Reserve’s Two-Day Policy Meeting
The Federal Reserve kicks off its latest two-day meeting today. Market watchers are expecting a monetary policy decision and press conference from the Federal Reserve today on Wednesday. This week’s Federal Open Market Committee (FOMC) meeting is likely to be less eventful than June’s hawkishly perceived meeting. It appears that there will be no new interest rate forecasts ‘dots’. Hence, attention will be on the post-meeting statement and Chair Powell’s conference.
“We believe the statement’s wording around asset purchases will be unchanged, but we expect that Powell will relate that the Committee discussed tapering again and that the economy is slowly getting closer to passing the ‘substantial further progress’ test to actually start tapering.– Michael Feroli, JPMorgan economist
However, there are more concerns that arose around the Delta variant. That could be what triggered a sell-off in the stock market early last week. Following this, policymakers will need to assess if a monetary policy adjustment is necessary given the risks of COVID-19 and high inflation. As of now, the Fed is likely to maintain a wait-and-see approach before making any adjustments.
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Chinese Stocks Tumble As Beijing Crackdown Deepens
China’s antitrust regulator has ordered Tencent (OTCMKTS: TCEHY) to give up its exclusive music licensing rights and slapped a fine on the company for monopolistic behavior. For the uninitiated, Tencent owns more than 80% of exclusive library resources, giving the company an advantage over its competitors.
Beijing’s latest tightening is a reform of its $100 billion ed-tech sector. This has undermined one of China’s hottest investment plays in recent years. Amongst them, TAL Education (NYSE: TAL) and New Oriental Education (NYSE: EDU) continue to slide on Monday. The new regulations ban firms that teach school curriculums from making profits, raising capital, or going public.
The Chinese government’s moves to rein in the nation’s powerful tech firms such as Jack Ma’s Ant Group Co. and Didi Global (NYSE: DIDI) have sent global investors fleeing. It appears to me that the panic selling among Chinese stocks may not be slowing down just yet. This came as investors are pricing in a possibility that Beijing will tighten regulation on other sectors that have seen robust growth. As a result, it may be too soon to look for bargains among the beaten-down Chinese stocks.
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Facebook Explores Integrating Oculus Workouts With Apple Health
Facebook (NASDAQ: FB) is getting ready to take the next step with its Oculus virtual-reality headset platform. In an unexpected move, the company has been working to integrate Oculus VR workouts with Apple Health. As you may be aware, Apple’s Health app already supports a number of health-tracking accessories. These include smart scales, blood pressure monitors, thermometers, blood glucose monitors, and more.
The feature would allow a user of the Oculus Move workout system to add data — like the number of calories burned — to the iPhone Health app. Code hidden in the Oculus app also references the ability to view Oculus workout data on the Oculus VR headset that was previously saved to the Apple Health app.
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Big Tech Earnings
Wall Street is gearing up for probably the busiest earnings day in the second quarter with Big Tech dominating the scene. Major tech companies including Microsoft (NASDAQ: MSFT), Advanced Micro Devices (NASDAQ: AMD), Alphabet, and Apple are set to report after the closing bell today. These will come on the heels of an already strong second-quarter earnings season.
“It appears that we’re going to get really solid earnings from these companies and that should give a little bit of a boost to the market. Some of these names have already run so much this year that perhaps we don’t get a large bounce,” said Victoria Fernandez, Crossmark Global Investments chief market strategist.
Major tech names such as Tesla, Snap (NYSE: SNAP), and Twitter (NYSE: TWTR) have posted results that handily topped estimates. This had added optimism around the forthcoming reports. This morning, we have some industrial stocks reporting. They include General Electric (NYSE: GE), Raytheon Technologies (NYSE: PHG), and United Parcel Service (NYSE: UPS), just to name a few. There is no doubt that growth concerns remain with the Delta variant continuing to be on the minds of many. It seems that a strong earnings season would be able to put some of those concerns to rest.
