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Market Snapshot: Dow futures fight for direction ahead of busy earnings week, Fed meeting

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Stock-index futures were little changed Monday as investors looked ahead to one of the busiest weeks of earnings season and a meeting of Federal Reserve policy makers.

What are major benchmarks doing?
  • Futures on the Dow Jones Industrial Average
    YM00,
    +0.16%

    were up 36 points, or 0.1%, at 33,977
  • S&P 500 futures
    ES00,

    were down 3.50 points, or 0.1%, at 4,168.
  • Nasdaq-100 futures
    NQ00,
    -0.22%

    fell 50 points, or 0.4%, to 13,877.

On Friday, stocks bounced back from a selloff the previous session triggered by reports President Joe Biden planned to push for a sharp rise in the capital-gains tax rate for Americans earning more than $1 million a year. Major benchmarks still suffered weekly losses, with the Dow
DJIA,
+0.67%

down 0.5%, the S&P 500
SPX,
+1.09%

off 0.1% and the Nasdaq Composite
COMP,
+1.44%

losing 0.3%.

Read: Capital-gains tax hike? Why the market bounced back so fast

What’s driving the market?

“Concerns about the COVID situation, a potential hike in U.S. capital-gains tax and overstretched valuations were some of the reasons for the bumpy performance last week on Wall Street,” said Hussein Sayed, chief market strategist at FXTM, in a note.

“Still, the S&P 500 index managed to close near its record highs as corporate earnings and economic data reassured investors that equities remain the best option for growing wealth,” he said.

Investors are gearing up for another busy week of what’s so far been an upbeat earnings season, with 181 S&P 500 companies, including 10 Dow components, due to report results. Investors will hear from tech heavyweights, with results due after the bell Monday from electric car maker Tesla Inc.
TSLA,
+1.35%

followed later in the week by Microsoft Corp.
MSFT,
+1.55%
,
Apple Inc.
AAPL,
+1.80%
,
Google parent Alphabet Inc.
GOOG,
+2.09%

GOOGL,
+2.10%
,
Facebook Inc.
FB,
+1.55%

and Amazon.com Inc.
AMZN,
+0.96%
.

Earnings Watch: Tesla and Big Tech are about to rev up the busiest week of earnings season

Through Friday, a quarter of S&P 500 companies had reported first-quarter results, leaving the index with the highest year-over-year growth in earnings since the third quarter of 2010, according to John Butters, senior earnings analyst at FactSet.

Analysts also expect double-digit earnings growth for the remaining three quarters of 2021, he noted. Above-average growth rates are due to a combination of higher earnings for 2021 and an easier comparison to weaker earnings in 2020 due to the negative impact of COVID-19 on numerous industries, he said.

The Federal Reserve’s two-day policy meeting, which concludes Wednesday, will be in the spotlight, though policy makers aren’t expected to make any material changes to monetary policy.

Economic Preview: Tone of next week’s U.S. economic data on track to be positive but the Fed will remain tone-deaf

A stronger economic backdrop since the last Fed meeting will likely be acknowledged, but investors shouldn’t “read into that more than what it is — a reasonable marking to market of where we are at the moment,” wrote economists at RBC Capital Markets, in a note.

Read: Why the Fed’s focus on those hardest-hit by the pandemic matters for markets

At his Wednesday news conference, Powell’s tone is also unlikely to change much, the analysts said. While the chairman’s assertions that rates are unlikely to be lifted before 2022 will probably be challenged over the coming year, Powell is likely to stick to his position, they said.

Mark Hulbert: Why it’ll take more than easy money from the Fed to keep sparking this bull market in stocks

Data on March durable-goods orders are due at 8:30 a.m. Eastern. MarketWatch-polled analysts expect a 2.2% increase from February.

Which companies are in focus?
  • U.S. health officials on Friday lifted an 11-day pause on Johnson & Johnson
    JNJ,
    +0.21%

    vaccinations following a recommendation by an expert panel. Shares of the drugmaker were up 0.6% in premarket trade.
  • Otis Worldwide Corp.
    OTIS,
    +0.47%

    shares were up 2% after the elevator and escalator manufacturing and services company easily topped estimates for the first quarter and raised its full-year guidance. 
  • Shares of Tesla Inc.
    TSLA,
    +1.35%

    will be in focus as it reports results after the bell.
  • Shares of Flagstar Bancorp Inc. 
    FBC,
    +3.42%

    shot up 4.9% in premarket trading Monday, after the Michigan-based bank announced an agreement to be acquired by New York Community Bancorp. Inc. 
    NYCB,
    +2.39%

    in a stock deal valued at $2.6 billion.
How are other assets faring?
  • The greenback fell less than 0.1%, based on trading in the ICE U.S. Dollar Index.
    DXY,
    +0.04%
  • June crude futures
    CL.1,
    -1.87%

    fell 1.6% to $61.12 a barrel, while gold
    GC00,
    -0.43%

    was down a touch to $1,776.10 an ounce.
  • The 10-year Treasury note yield
    BX:TMUBMUSD10Y
    climbed on Monday by over 3 basis points to 1.596%, as investors eyed the midweek Fed meeting.
  • Japan’s Nikke 225 i
    NIK,
    +0.36%

    rose 0.4% and China’s CSI 300
    000300,
    -1.13%

    fell 1.1%. The Stoxx Europe 600 index
    SXXP,
    +0.12%

    was up less than 0.1%, while the U.K.’s FTSE 100
    UKX,
    +0.17%

    rose 0.1%.

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