Major Stock Indexes Hover Near Unchanged in Afternoon Trading

Markets Bet on Steep Rate Cuts Over the Next Year

5 minutes ago

Financial markets are betting that, in the year ahead, the Federal Reserve is going to cut interest rates as drastically as it typically does during recessions. However, market predictions on rates have a poor track record of actually panning out. 

The Fed will likely cut its benchmark fed funds rate 1.75 percentage points from its current level between now and September 2025, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

In the past, the Fed has only cut interest rates that fast when it wants to counteract a serious economic downturn. The last time it cut its rate that much that quickly was during the Great Recession.

Markets widely expect the Fed will begin to cut rates from its current level in September. The big question for policymakers, and markets, is how fast the Fed will cut after that. The last time they were polled in June, Fed officials themselves projected that by the end of 2025, they’d cut the rate down to a range of 4%-4.25% from its current level of 5.25%-5.5%.2

That would only be 1.25 percentage points of rate cuts over 18 months, much less than what markets predict. 

Markets have a poor track record of predicting the Fed’s actions over the long term. Traders have often bet on drastic rate cuts in the past, only to see those hopes dashed and the Fed take a more cautious approach. 

–Diccon Hyatt

Philips Shares Surge as Sales Rise Despite China Weakness

1 hr 9 min ago

Shares of Koninklijke Philips (PHG) jumped Monday after the company reported second-quarter earnings that saw comparable sales increase year-over-year as solid demand in the rest of the world offset a sales drop in China.

The Dutch conglomerate reported 4.46 billion euros ($4.82 billion) in total sales, meeting consensus analysts’ estimates compiled by Visible Alpha. Philips posted EUR 452 million in net income, narrowly missing the EUR460.4 million analysts had projected.

Comparable sales rose 2%, with Philips saying China still presents a “fundamentally attractive growth market” despite its sales weakness in the second quarter.

The company also affirmed its guidance for the full fiscal year while “acknowledging that uncertainties remain.” Philips projects 3% to 5% comparable sales growth, with free cash flow between EUR900 million and EUR1.1 billion.

Philips shares were up 13% at $29.17 Monday afternoon, trading at their highest levels in more than two years.

–Aaron McDade

What 3M Levels to Watch After Friday’s 23% Surge

2 hr 29 min ago

3M shares jumped 23% on Friday, their largest ever one-day percentage gain, after the maker of Scotch tape and Post-it Notes reported better-than-expected quarterly results and boosted its full-year profit outlook.

The share price broke out from a pennant pattern on the highest weekly trading volume since early March, indicating a continuation of the current uptrend.

Amid further upside, 3M shares may encounter overhead resistance on the chart at key levels including $128, $152, and $175.

A pullback could see the shares revisit the $106 area, where they would likely attract buying interest near the stock’s initial breakout point and the March 2020 pandemic low.

Read the full technical analysis here.

3M shares were down about 1.7% in recent trading Monday.

–Timothy Smith

Onsemi Soars After Better-Than-Expected Results

3 hr 16 min ago

Onsemi (ON) shares surged Monday after the chipmaker reported better-than-expected revenue and highlighted gains in the automotive industry.

The company posted second-quarter revenue of $1.74 billion, down from the year-ago period but better than analysts expected. Net income of 78 cents per share fell year-over-year and missed estimates, but excluding one-time items came in at 96 cents per share and beat expectations.

 CEO Hassane El-Khoury said Onsemi, which makes chips and sensors for automotive and industrial markets, is strengthening its silicon carbide leadership position in automotive as we ramp production with leading global (vehicle makers) in Europe, North America and China.”

Onsemi, recently announced a multi-year deal with Volkswagen (VWAGY) to supply chips for the automaker’s electric vehicles.

The company provided guidance for the coming quarter that was in line with analysts’ expectations.

Onsemi shares were up 12% in recent trading, leading gainers on the S&P 500 and Nasdaq Composite.

–Naomi Buchanan

How Big Tech Earnings Could Affect Markets This Week

4 hr 46 min ago

The stock market has been turned on its head in recent weeks, and the ride may get wilder this week with the majority of the Magnificent Seven reporting earnings at a critical juncture for the group.

Bank of America estimates that more than one-third of aggregate S&P 500 earnings will be reported this week.

That’s in large part because Microsoft (MSFT) will report Tuesday afternoon, Meta’s (META) results come when markets close Wednesday, and Apple (AAPL) and Amazon (AMZN) are both slated to report after the bell on Thursday. Those four companies account for nearly 20% of the S&P 500 index—about as much as the Health Care and Industrial sectors combined. 

Big moves in their stocks would take major indexes in tow, and markets may be on edge heading into this week’s reports after Tesla (TSLA) and Alphabet (GOOGL) earnings sent tech stocks spiraling last week, pulling the sector into a correction and leading the S&P 500 to notch its worst day since December 2022.

Any weakness in this week’s big tech earnings could widen the cracks that began to show last week. They could also feed into or challenge the narrative coalescing around spending on artificial intelligence (AI) that has weighed on sentiment lately.

–Colin Laidley

Major Indexes Poised to Open Higher Monday

6 hr 3 min ago

Futures tied to the Dow Jones Industrial Average were up 0.5%.

S&P 500 futures were up 0.6%.

Nasdaq 100 futures were up 0.9%.