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Day Ahead: 3 Things to Watch for July 28

Published 07/27/2020, 03:46 PM
Updated 07/27/2020, 04:01 PM
© Reuters.

By Liz Moyer

Investing.com -- Big tech bounced back on Monday, lifting other sectors as the world awaits the Federal Reserve's next decision on interest rates and word from Capitol Hill on negotiations over a new round of stimulus.

Chip makers were also in the news after Intel Corporation (NASDAQ:INTC) stoked concerns about production of its next-generation chip, pushing its shares down another 2% on Monday after a sell-off last week. Shares of Taiwan Semiconductor Manufacturing (NYSE:TSM) rose more than 11%.

The week will feature a deluge of earnings reports from across the S&P 500, including Tuesday announcements from Harley-Davidson Inc (NYSE:HOG), JetBlue Airways Corp (NASDAQ:JBLU), McDonald’s Corporation (NYSE:MCD) and Pfizer Inc (NYSE:PFE), among others.

Here are three things that could affect markets tomorrow:

Gold at a record high

Gold Futures reached a new record high on Monday even as stocks continue to gain, an apparent contradiction between the part of the market signaling risk off, and the part signaling risk on.

Investors flock to gold as a store of value when the economy looks uncertain. The new record, at $1,931 an ounce on Comex, is the highest since September 2011, and some analysts believe there is still room to rise above $2,000 an ounce before long.

Gold's rally in recent weeks has come on top of trillions of dollars of government stimulus and an ever-weakening dollar. The US Dollar Index Futures, which measures the dollar against a basket of six other currencies, touched a 17-year high in March at 103.96 and is below 94 most recently. That is the lowest in almost two years.

New stimulus hope as Fed meets

Republicans were set to unveil their own proposals for another round of economic stimulus as the U.S. struggled to get a grip on the coronavirus.

Treasury Secretary Steven Mnuchin said over the weekend that the package would include $1 trillion of relief. That is expected to include another round of $1,200 checks to individual taxpayers who earn below a certain income. It is also expected to include an extension of emergency unemployment checks, though at a lower amount than the current $600 a week pandemic unemployment assistance. 

On Tuesday, the Federal Open Market Committee begins the latest of its regular two-day meetings. The expectation is for the central bank to maintain rates near zero as it did in its last meeting, held just as the economy started to reopen after Covid-induced business shutdowns. The Fed's main task this week is to examine its commitment to zero rates and to an ongoing asset purchase program as it tries to jump-start the economy.

FANG earnings: All bark and no bite? 

FANG stocks pushed the market higher on Monday after selling off last week for the first time in two months. This is a big week for the tech giants, with Facebook Inc (NASDAQ:FB), Amazon.com Inc (NASDAQ:AMZN), Apple Inc (NASDAQ:AAPL) and Google's Alphabet (NASDAQ:GOOGL) Inc Class C (NASDAQ:GOOG) set to report earnings, along with a slew of other companies.

Analysts will likely be listening to what executives say about the outlook for the second half of the year. But the tech sector rally this year has gone against fears that Covid-related shutdowns would wreak damage on company earnings. Still, investors have begun to worry that the frothiness in the tech sector is pointing to another bubble that could burst at a moment's notice.

Latest comments

The feds do not have an endless supply of money. It it's going to eventually come to a halt. They're hoping to stave off a large decline in the market until a vaccine is developed and the public feels more comfortable with getting out and spending money doing the things they did before Covid. I personally think they're in for a rude awakening because this is going to extend long into next year and the market can't support a "Grand Facade"for that long. Why do you think Credit Suisse is discontinuing all their VIX. Just Say'n, they've seen the future and it's bleak for the market.
well they have endless supply of money😄😄😄👍
The more the Fed increases the debt on their balance sheet, the lower the dollar will go and the better gold and BTC start to look.
You don’t seem to see money printing as a catalyst for the appreciation of gold and silver. Even Bitcoin is worth no less than paper. Uncertainty is a much overused buzz word for the financial media. It’s not the reason for the current rise in metals .
prepeare to sell of! the iceberg is at sight. Titanic gonna sink
Stop handing out all of our kids money this country is ruined they will have no future the US will turn into another Zimbabwe
Their future will be limited anyway if you dont teach them how to adapt, clearly people who are unaffected are the ones that working from home. Teach them how to make money online, and become self-sufficient. And if thats wrong ask someone whos already doing it and seenif they sleep easy at night
everybody know institutions need to get positioned for maximum profit on the way down again before they decide when they burst "tech bubble"
Gold at a 9 year high and pushing 2k. I think a lot of people are waiting for the tech bubble to burst
I think a lot of people are waiting for the dollar to burst.
Alabaster, thats very funny. You're standing on the tracks looking way down the tracks for signs of a train - that ran you over a long time ago. Whats it going to take for you to see the real value of the US dollar buddy? Its already FREE. -Or have you somehow missed the fact that when they give you something for literally NOTHING that another word for that is FREE. Or maybe its the fact that they called it STIMULUS instead of FREE MONEY for everyone thats fooling you? Only this is money this country doesn't and never will have to give. Want to know exactly when the dollar will crash? You're waiting for a chicken with a missing head to figure out its DEAD.Only your no smarter than the chicken because you still think its alive TOO.  I think the problem is that you must be too young to know anything about rich republicans... So here's a little clue, THEY NEVER, EVER,  GIVE AWAY ANYTHING OF VALUE. Yet here they are passing out US DOLLARs to anyone with a heartbeat .... what's that spell?
PS, the moe than give away the FASTER folks will realize its WORTHLESS,. now why would they want that? because THEY DONT OWN ANY DOLLARS! They traded them all for GOLD wgeb the central banks started loading up and KEPT buying all they could get at $1200 for 18mths until smart traders realized that gold COULDNT go lower and realized what all that central bank buying meant.... Which might also explain WHY it seems to be going STRAIGHT UP every since big investors started following those banks
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