Tech Earnings in the Spotlight: What Investors Need to Know

Hello readers,

After Fed Day, earnings are back in the spotlight, with Apple and Amazon due to report results after the market close. Meta Platforms shares rallied off-hours after the Facebook and Instagram parent reported a sharp rise in digital advertising sales, while S&P 500 and Nasdaq-100 futures rose in early trading. That follows the Nasdaq Composite’s 2.6% jump yesterday, in its best day since February. 🚨 Follow our live coverage throughout the day for the latest news affecting markets.

Stocks to Watch:

• Meta Platforms: Shares of the social-media company jumped 7% in premarket trading after it reported higher profits and gave a better-than-predicted revenue forecast.
• Arm: The British chip designer reported higher-than-expected revenue for last quarter, but failed to impress with its forward guidance. Its shares fell 11% ahead of the opening bell.
• Toyota Motor: The Japanese automaker reported higher quarterly profits, helped by a weaker yen, but a fall in sales volumes. The strengthening of the yen since July raises questions about Toyota's outlook. Its shares sank 8% in Tokyo.
• Société Générale: The lender cut its outlook for the retail bank in France, despite reporting better-than-expected results. Its shares fell 6% in Paris.

Apple, Amazon, Intel, and Coinbase are due to post results after the market close. ConocoPhillips is among the companies reporting before the opening bell.

Why the Fed Risks Falling Behind: ‏‏‎ ‎ Investors seem to have gotten very comfortable with the Federal Reserve’s likely path ahead, including a rate cut in September and a couple more thereafter. What could go wrong now? Actually a lot. The Fed tried not to tip its hand too much following its meeting on Wednesday, saying risks between inflation and unemployment “continue to move into better balance.” Fed Chair Jerome Powell still insists future moves will be fully dependent on incoming data. But markets appear to have made up their minds. Futures now price in a 100% chance that the Fed will cut rates in September, the CME Group’s FedWatch tool shows. There are risks of complacency in two directions. Firstly, investors might be getting too optimistic about the outlook for rate cuts. It is unclear what might cause an inflation rebound, but geopolitics is a clear candidate. On the other hand, the bigger risk could be that the Fed reacts too slowly as signs of an economic slowdown build. Keep reading.

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Charting the Markets ‏‏‎ ‎ Meta is hardly the only big tech company with no plans to put the brakes on its blowout artificial-intelligence spending. It might be the only one where that news was already priced in, writes Heard on the Street's Dan Gallagher. The strength of Spain’s economy is a tailwind for BBVA and makes the bank's bid for local peer Banco de Sabadell look smart. But it also reinforces the defense of Sabadell, which has a bigger domestic presence and could still beat back a deal, says Jon Sindreu. The largest wholesale electricity market in the U.S. is signaling that there’s a shortage of power plants on its grid. That is helping supercharge stocks of regional power plant owners like Vistra and Constellation Energy.

Must Reads

• Bill Ackman had hoped to capitalize on his social-media popularity in launching a new fund. Photo: Jeenah Moon/Bloomberg News Bill Ackman pressed pause on the initial public offering of a new fund aimed at everyday investors after a lack of investor demand forced him to dramatically shrink his fundraising target.
• Efforts to address the cause of climate change have fallen short so far. That is leading to a big rush of government and private money to treat the symptoms.
• By opening the door wider to an interest-rate cut in September, the Federal Reserve is on a crash course with the presidential election. Any decision on interest rates is bound to upset either Republicans or Democrats.

This Day in Markets 📈 On this day in 1973, IBM was fined $150,000 a day by a federal judge for contempt of court in a high-profile antitrust case in which the company refused to turn over sensitive documents requested by the U.S. government.