US stock futures were largely flat Sunday night as investors prepared for a critical week of corporate earnings. Traders especially focus on results from major tech giants that could shape the market’s next move.
Futures on the Dow Jones Industrial Average were down 27 points, or 0.05%, and S&P 500 futures were off 0.04%. Futures on the Nasdaq 100 dipped 0.03%.
The low-key trading was a sign of cautiousness in the market landscape as traders brace for a deluge of financial results, especially from big tech companies, which have driven much of this year’s stock rally.
Is Wall Street due for a pullback? The S&P 500 gained 0.6%, and the Nasdaq was up 1.5%, with both benchmarks notching record highs. The Dow Jones Industrial Average, meanwhile, slumped over the week.
The attention remained firmly fixed on earnings from the Magnificent Seven: Alphabet, Tesla, Microsoft, Apple, Amazon, Meta, and Nvidia. Alphabet (Google’s parent) and Tesla are set to lead off the tech earnings calendar this week.
According to FactSet, the Magnificent Seven are anticipated to report an aggregate 14% gain in second-quarter earnings. On the other hand, the remaining 493 companies in the S&P 500 are expected to see earnings grow by just 3.4%.
The divergence has fueled investor hopes that strong tech earnings could increase the broader market. Mark Malek, chief investment officer of Siebert Financial, said that the S&P 500 was at record levels right at the start of earnings season. He added that if the market could get through the season without too many major disappointments, it would be important for maintaining the current upward momentum.
US pushes tariff demands as trade tensions rise
Even if earnings are still in the spotlight, trade issues have not gone away as a market worry.
On Sunday, US Commerce Secretary Howard Lutnick stated that August 1 would be a hard deadline for implementing new tariffs.
He said countries aiming to avoid the tariffs must begin making payments by that date. However, he emphasized that diplomatic channels would remain open beyond the deadline, noting that no one would prevent countries from continuing talks with the US after August 1.
The trade rhetoric comes amid a market that has mostly shrugged off tariff fears. However, a significant talk collapse could add another dose of market volatility to stocks, especially those exposed to the health of international trade.
Investors are also waiting to see if other countries step in or strike back, at a time when supply chain disruption costs, raw materials, and inflation remain in focus.
Investors track economic data and broader earnings
Investors will pay attention not only to earnings and trade news, but also to any sign of strength or weakness in the US economy amid a wave of economic data releases.
The June reading of the Conference Board’s Leading Economic Index (LEI) is scheduled for release Monday at 10 a.m. ET. The LEI is a blend of 10 forward-pointing indicators, commonly used to forecast the economy’s strength three to six months from now.
Economists anticipate that the report will send mixed messages. Although consumer demand has stayed relatively strong, headwinds from higher interest rates and global uncertainty could dampen the overall outlook.
Beyond big Tech, many companies across the economy will report earnings, giving a broader picture of the economic landscape. Verizon Communications and Domino’s Pizza were among the big companies scheduled to report their latest quarterly results on Monday.
But the earnings season has been strong so far. More than 86% of the first 59 companies in the S&P 500 to report have topped Wall Street estimates, according to FactSet.
Tech-driven optimism, potential trade tangles, and big economic numbers make for a tricky environment for investors. As the second-quarter earnings season revs up, investors will hope to gauge if the bullish run on Wall Street can play on.
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