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Fed Meeting, Big Tech's Big Quarter, Mask Warning - What's Moving Markets

EconomyJul 28, 2021 06:36AM ET
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© Reuters.

By Geoffrey Smith 

Investing.com -- The Federal Reserve announces its policy decisions and, perhaps, some new guidance on the path of interest rates and bond purchases. Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) all report staggering second-quarter profits, while Facebook (NASDAQ:FB) is due to report after the close. China's manic selling slows as state media try to calm investors down. Surging case numbers force the U.S. to tighten its stance on masking up, while oil is firm after a strong draw on U.S. stockpiles. Here's what you need to know in financial markets on Wednesday, 28th July.

1. Fed to update on guidance

The Federal Reserve will tell the world whether it’s changed its mind about the timing when to reduce its bond purchases and raise interest rates, at the end of its latest two-day policy meeting.

The Federal Open Market Committee will release its policy statement at 2 PM ET (1800 GMT), while Chairman Jerome Powell will hold his regular press conference half an hour later.

The spread of the Delta variant across the U.S. (see below) and supply-side obstacles to growth such as component and labor shortages may have cooled any enthusiasm for an early ‘tapering’ of bond purchases. Goldman Sachs (NYSE:GS) analysts cut their growth forecasts for the next two quarters by a full percentage point earlier this week, citing such factors.

2. Big Tech's Big Quarter

The megacap tech companies continue to generate more cash than even the most optimistic expectations. Apple, Alphabet and Microsoft all reported record quarters after the closing bell on Tuesday, with a combined profit of $57 billion, which equates to $626 million a day.

Alphabet in particular impressed, thanks to roaring demand for advertising across its various platforms, a reflection of companies’ eagerness to capture their share of pent-up demand as the U.S. and other economies reopened. The results set a high bar for Facebook, which reports after the close on Wednesday.

Apple, however, wasn’t quite able to banish the threat of chip shortages, and also said that it expects growth in its services revenue to slow from now on.

3. Stocks set to open mixed. Facebook, McDonald's earnings due

U.S. stock markets are set to open mixed later, again taking their lead from China, where the manic selling of Monday and Tuesday slowed as Chinese state media tried to talk down any sense of crisis. Most mainland indices ended down moderately, but the Hang Seng index managed a 1% bounce.

By 6:15 AM ET, Dow Jones futures were down 44 points, or 0.1%, while S&P 500 futures were up less than 0.1% and Nasdaq 100 futures were up 0.1%.

Aside from the megacaps, attention may zero in later on Starbucks (NASDAQ:SBUX), which warned of slowing growth and rising costs in China, its biggest foreign market, late on Tuesday. In addition, McDonalds (NYSE:MCD) , Shopify (NYSE:SHOP), Thermo Fisher (NYSE:TMO) and Bristol Myers (NYSE:BMY) Squibb report early, while Paypal, Ford Motor (NYSE:F) and Align (NASDAQ:ALGN) all report later.

Overnight, there were strong earnings from European banks including Barclays (LON:BARC) and Deutsche Bank (DE:DBKGn), while mining giant Rio Tinto (NYSE:RIO) detailed a $9 billion dividend and buyback program after a windfall on copper and iron ore prices. Gucci owner Kering (PA:PRTP) meanwhile continued the run of impressive results from the luxury sector.

4. U.S. tightens Covid-19 policy as U.K. prepares to lift quarantine requirements

The U.S. took a step back in its fight against Covid-19, as the Center for Diseases Control and Prevention changed its guidance to advise even vaccinated people to wear a mask in certain indoor settings. It’s biggest official move in months to buck the trend of economic reopening and relaxing social distancing rules.

Additionally, President Joe Biden said he is considering an order for all federal employees to be vaccinated, which would be the clearest example yet of coercing vaccination in the name of public health. The two moves came on the day when the Covid-19 case count across the U.S. topped 100,000 for the first time since February.

There was better news further afield, at least for the vaccinated. The U.K. was reported to be on the verge of lifting its quarantine restrictions for fully-immunized travelers from both the EU and U.S., news tha sent the shares of European airlines and hotel operators higher in early trading.

5 Oil firm after inventory draw

Crude oil prices were higher overnight, sustained by the surprisingly large draw on U.S. stockpiles reported by the American Petroleum Institute. The API said crude inventories fell by 4.7 million barrels last week.

U.S. government inventory data are due at 10:30 AM ET, as usual.

By 6:15 AM ET, U.S. crude futures were up 0.3% at $71.89 a barrel, while Brent was up 0.3% at $73.75 a barrel.

Fed Meeting, Big Tech's Big Quarter, Mask Warning - What's Moving Markets
 

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Comments (13)
Alan Rice
Alan Rice Jul 28, 2021 1:33PM ET
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Covid20- Play it again, Sam.
Jon Bal
Jon Bal Jul 28, 2021 1:04PM ET
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He'll say they're thinking about talking about thinking about tapering
Whaling Trawler
Whaling Trawler Jul 28, 2021 10:07AM ET
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Powell "You don't know you're in a bubble until it pops"
Todd Gray
Todd Gray Jul 28, 2021 10:07AM ET
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except for when your inside the atmosphere of an ethereal bubble, and something deeply innate senses things are just not right,... that might be true.
John Avenetti
John Avenetti Jul 28, 2021 9:23AM ET
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masking? doesn't do anything. it's likec trying to stop a mosquito with a chain link fence. it's about control.
Leo Yuan
Leo Yuan Jul 28, 2021 9:23AM ET
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Fake news, like the stolen election conspiracy.
Kaveh Sun
Kaveh Sun Jul 28, 2021 9:20AM ET
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If powell changes the direction, he will be replaced very quick.
MuraliKrishna Brahmandam
MuraliKrishna Brahmandam Jul 28, 2021 9:04AM ET
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Powell can only fool himself and everyone else one last time today. Being in his shoes is not for the ordinary but we are in the ninth inning. game is over but it ain't until ...
Scott Poore
Scott Poore Jul 28, 2021 9:04AM ET
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The daily COVID cases quoted in this article are not accurate.  Daily cases on July 27th totaled 61,581 and totaled 36,991 on July 26th.  This is no where near the 100,000 daily number quoted in the article.  In addition, reporting cases without deaths for context is extremely problematic.  The Delta variant has not led to the same mortality rates under the original strain in the Fall of 2020.  The 7-day average rise in cases from Sept 7 to Oct 4, 2020 (58 total days) was +131%.  The 7-day average rise in deaths over that same period was +15%.  Since we bottomed in May, the 7-day average rise in cases, May 30 to July 27 (58 days), is +182% (higher than the Fall).  But, the 7-day average rise in deaths over the same period is -46%.  The Delta variant is not as lethal as the original strain.  The same numbers are evident in the U.K. as cases have now rolled over and are in significant decline.
John Avenetti
John Avenetti Jul 28, 2021 9:04AM ET
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the whole thing is a massive lie. it's about a medical dictatorship
Leo Yuan
Leo Yuan Jul 28, 2021 9:04AM ET
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You left out key details such as a big portion of the population being vaccinated during the time frame with a lower average rise in deaths.
michael brennick
michael brennick Jul 28, 2021 8:46AM ET
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pull me pelican and spank rear
MuraliKrishna Brahmandam
MuraliKrishna Brahmandam Jul 28, 2021 7:32AM ET
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The virus lives in the mask itself. Most never even wash their masks.
John Avenetti
John Avenetti Jul 28, 2021 7:32AM ET
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Look at the 10 down thumbs?? The only thing those ten down thumbs know is what their told by the media. They're begging for a medical dictatorship. Sheep. Delta variant? Delta is a deep sleep state. They're hiding it in plain sight. people are sleeping.
New Jazenevd
New Jazenevd Jul 28, 2021 7:03AM ET
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Labor shortages, holding economy down, will continue as long as government pays oversized unemployment benefits. Stock market will continue moving higher as long as the same government prints money, instead of doing real things to help the economy. These scenarios will hardly change until next elections.The government will continue harming economy while printing more money, fueling stock market.
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New Jazenevd
New Jazenevd Jul 28, 2021 7:03AM ET
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Howard Cheetham  The economy was miserable under Obama muddling between 0 and 0.5% “growth”.
Jurgen Daub
Jurgen Daub Jul 28, 2021 7:03AM ET
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so, since you seem to know, tell us, what is the REAL THING?
Jurgen Daub
Jurgen Daub Jul 28, 2021 7:03AM ET
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Howard Cheetham or reduce prices...
New Jazenevd
New Jazenevd Jul 28, 2021 7:03AM ET
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Jurgen Daub  It was already answered: pro-business government, like it was under Trump, is the way to make the economy stronger. Suggest you reading thread before posting already answered questions, esp. in CAPS.
James Johannsen
James Johannsen Jul 28, 2021 7:03AM ET
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economy's been dead since 08 trump was another bid pharma puppet locking down the economy then a 6.2 trillion dollar bankster bailout
Jeffrey Vose
Jeffrey Vose Jul 28, 2021 7:00AM ET
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Yea wearing cloth masks to stop a virus is like putting up a chain-link fence to stop mosquitoes.
New Jazenevd
New Jazenevd Jul 28, 2021 7:00AM ET
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Fighting mosquitoes on state-mandated level could be the next step. Or fighting something else on the state level. Totalitarian state needs to invent and fight enemies all times.
Jozef Drozd
Jozef Drozd Jul 28, 2021 7:00AM ET
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It is all about controlling people minds to make them to take the experimental jabs , and has nothing to do with prevention of anything.
Mike Blade
Mike Blade Jul 28, 2021 6:47AM ET
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Would you really believe whatever the govt say?? would you trust your life on the govt?? does the govt really care for the people?? I would question everything with whata going on now. All the lies are just on the surface in plain sight. Wake up guys! AGE OF AQUARIUS!
Meru Pet
Meru Pet Jul 28, 2021 6:44AM ET
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thx for the news
 
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