The newly released report shows that the business results of many businesses remained stable despite difficult macroeconomic conditions in the second quarter.
This has made US stock futures green again after a bright red session. Dow Jones Futures rose 81.6 points, or 0.26%. S&P 500 Futures also gained 26.4 points, or 0.66%, while Nasdaq Futures gained 150 points, or 1.24%.
The latest market move comes after a report showed that Alphabet Inc., the parent company of Google, still maintained stable earnings. Meanwhile, the optimistic outlook from Microsoft also helped save investor sentiment.
The positive development came after the main indexes of US stocks all dropped in the session of July 26. Accordingly, Dow Jones lost 228.5 points, or 0.71%. The S&P 500 lost 45.79 points, or 1.15%, while the Nasdaq lost 220.09 points, or 1.87%. Fear of underperforming businesses in the second quarter was the main reason for this drop.
Although it is green again, the financial market in general is still struggling before the two-day meeting of the Fed. It is almost certain that the Fed will continue to raise interest rates. This is part of a wave of monetary tightening globally aimed at quelling record inflation as well as fears of a global economic slowdown.
In the early trading session on July 27, stocks in Japan, Korea and Australia were all stable.
US Treasury yields were also little changed as investors believe the Fed will raise interest rates by 75 basis points after its meeting ending July 27 US time. The dollar has fallen, oil is at $96/barrel and Bitcoin is above $21,000/coin.
If it goes as expected, the Fed will raise rates by 150 basis points in June and July alone, the highest rate hikes not seen since the 1980s when Fed Chairman Paul Volcker struggled with soaring inflation.
Monetary tightening, the energy crisis in Europe, the Russia-Ukraine conflict, the gloom in China’s property market and the challenges of the Covid-19 pandemic remain among the risks that cloud the global outlook. The world could soon be on the cusp of a full-blown recession, the IMF warns.
US corporate earnings are offering some hope. More than ¾ of enterprises that have announced reports at the present time have met or exceeded expectations. However, the question many people wonder is how long they can last.
“Inflation is hurting companies and the question is whether these rate hikes will do anything to ease the pain,” Nancy Davis, founder of Quadratic Capital Management, told Business Insider.
In another development, US President Joe Biden will have a phone call with Chinese leader Xi Jinping on July 28. The White House is also considering whether to remove some tariffs on Chinese imports to stave off inflation.