Brendan McDermid | Reuters
Here are the most important news that investors need to start their trading day:
1. Find Stock Futures
Stocks were poised to open higher on a pivotal Wednesday morning. Investors are looking for what the Fed will say after its two-day meeting (more on that below), and there are some key earnings on the schedule. Boeing reported before the bell, while Ford, Qualcomm and Meta are expected to be the parent companies of Facebook after the market closes. This earnings season is filled with warnings about inflation and macroeconomic woes, but the reports have been largely good. According to FactSet, about 70% of the 150 S&P 500 companies that have reported earnings so far have exceeded Wall Street expectations.
2. Fed Decision Day
Federal Reserve Chairman Jerome Powell reacts as he testifies before the Senate Banking, Housing, and Urban Affairs Committee hearing on the “Semi-Annual Monetary Policy Report to Congress,” on Capitol Hill in Washington, DC, US, June 22, 2022.
Elisabeth Frantz | Reuters
The Federal Reserve is wrapping up its two-day policy meeting on Wednesday, culminating in the central bank’s latest rate hike and the words of Chairman Jerome Powell. So what would that increase, three-quarters of a point look like, or would there still be a chance of a full percentage point? The market is leaning toward the former, but some observers also expect Powell to speak fairly firmly about the need to strike inflation now, or at least for the next few months, as the economy slows. “He is very likely to ask Powell about the chance of a recession,” said Michael Feroli, chief economist at JP Morgan. “We suspect he’ll say it’s a risk but it’s not an imposed consequence.”
3. Tech giants miss, ignore the market
Sundar Pichai, CEO of Alphabet and Google interviews CNBC’s Deirdre Bosa.
Both Alphabet and Microsoft benefited from the top and bottom results when they reported earnings after the bell on Tuesday. Both companies’ shares rose… Microsoft provided some decent guidance for the year ahead. He did not lower his forecast despite economic challenges, including the slowing US economy suffering from historical price growth and strong Fed rate increases. In the case of Alphabet, it appears that Google’s father’s results, while poor, were not as bad as feared. Investors will get more tech earnings on Wednesday afternoon with Meta and Apple after the bell on Thursday.
4. Housing Market Blues
Contractors work on the roof of a home under construction at the Steelpoint subdivision in Sumter, South Carolina, on Tuesday, July 6, 2021.
Mika Green | Bloomberg | Getty Images
Fortunes have shifted dramatically for US homebuilders. Sales have slowed after the market became completely nervous during the height of the Covid pandemic, and builders are starting to feel the pinch, offering more incentives. “We have to work harder to sell homes. We have to be smarter,” Bolt CEO Ryan Marshall said on a conference call. There doesn’t seem to be any sign of relief in the short term either. Mortgage demand fell again last week, according to the Mortgage Bankers Association. Prices remain high, and so are prices, and while more homes have appeared on the market, supply remains tight.
5. Chipotle’s High Prices and Profits
A person wearing a protective mask walks out of a Chipotle restaurant in San Francisco, California, April 19, 2021.
David Paul Morris | Bloomberg | Getty Images
“The low-income consumer has definitely fallen behind on the buying pace,” Chipotle CEO Brian Nicholl said on the company’s conference call, after the burrito giant released its second-quarter results. “Fortunately for Chipotle, you know, the majority of our customers are consumers of high family income.” Chipotle’s earnings beat Wall Street expectations in large part due to the company’s price hikes to stave off inflation. While the increases may have scared some customers from indulging in the chain’s offerings, you can see from Nicole’s comment above that the company isn’t too concerned about losing the lower end of the market. In fact, Chipotle plans to raise more prices next month.
CNBC’s Carmen Renick, Patti Doom, Jennifer Elias, Jordan Novett, Diana Olick and Amelia Lucas contributed to this report.
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