U.S. stock futures are heading for losses to begin the third quarter of the year as investors brace for a Federal Reserve meeting, a wave of big tech earnings, and escalating tensions between the U.S. and Iran. Dow Jones Industrial Average futures were down 105 points, or 0.2%, while S&P 500 futures fell 0.1% and Nasdaq 100 futures lost 0.4%, according to Barrons.
Federal Reserve Meeting and Economic Outlook
The Federal Reserve is scheduled to meet on July 28-29, with a decision on interest rates expected Wednesday, July 29. Markets currently estimate a 38% chance of a rate hike on Wednesday, and those odds increase to over 80% for the September meeting, according to Investors. Barclays strategists noted that while the Fed is expected to hold rates next week, the central bank will likely emphasize its fight against inflation.
Investors are also monitoring an appearance by Federal Reserve Chairman Kevin Warsh at a central-banking forum. Additional economic data releases scheduled for the week include the July Consumer Confidence Survey on Tuesday, Q2 GDP and June Personal Income and Outlays on Thursday, and the July Chicago PMI on Friday, as reported by Morningstar.
Tech Earnings and AI Spending Concerns
A massive earnings wave
is expected this week, headlined by several hyperscalers. According to Morningstar, Meta Platforms and Microsoft are scheduled to report on Wednesday, July 29, followed by Apple and Amazon on Thursday, July 30. Other notable reports include Coca-Cola, Boeing, Ford Motor, and Visa on Tuesday, and AbbVie on Friday.
Investor focus remains on the sustainability and financing of artificial intelligence capital spending. According to Investors, Google-parent Alphabet and Tesla dived recently due to cash-burning capital spending, with Google tumbling 7.8% and Tesla falling 17.8%. Barclays strategists added that Google’s strong results did not ease concerns regarding AI-related spending. Memory giants Samsung Electronics, SK Hynix, and Seagate Technology are also expected to report this coming week.
Geopolitical Tensions and Energy Markets
Markets are reacting to the U.S.-Iran conflict, which has seen oil prices climb back toward $100 a barrel. The Houthis in Yemen claimed to have fired missiles at a Saudi Arabian refinery, extending a new front in the conflict. While the U.S. did not conduct new attacks on Iran overnight—ending 13 days of strikes—President Donald Trump stated Friday night that while he does not think Iran is ready to make a deal, he is willing to listen.
Reports indicate the U.S. has proposed a new ceasefire and a return to the memorandum of understanding, including Houthi rebels.
The volatility in energy markets is reflected in recent price movements:
- U.S. crude oil futures rose 9.2% last week to $89.31 a barrel.
- Brent crude spiked 9.85% for the week to $96.78 a barrel.
- Oil prices fell 3.1% on Friday following reports that Pakistan is pushing for new U.S.-Iran talks.
Market Performance and Risks
The stock market retreated last week as Treasury yields and oil prices soared. The Nasdaq composite tumbled 2.1%, the S&P 500 declined 0.6%, and the Dow Jones Industrial Average fell 0.4%. The 10-year Treasury yield leapt 14 basis points to 4.68%, despite a dip on Friday.
Despite these recent losses, the second quarter saw significant gains. The Nasdaq Composite and S&P 500 rose 21% and 15% respectively—their best quarter since 2020—while the Dow Jones Industrial Average rose 13%, its best quarter since 2022. However, Barclays strategists warned that the margin for error is low
given current macro risks and typically negative pre-midterm seasonality.
