Futures muted ahead of Fed decision, tech earnings this week

[January 29, 2024]  (Reuters) - U.S. main index futures were subdued at the start of a week packed with major events including the Federal Reserve's rate decision and big-ticket tech earnings that could set the tone for Wall Street after a recent record-breaking rally.

The S&P 500 notched an intraday record high for four sessions and its fifth all-time closing high this month, picking up pace from 2023, after a slow start to the year as investors reassessed their bets over the timing of rate cuts.

Even though investors rejoiced a continued moderation in U.S. prices on Friday, the enthusiasm was curbed by Intel's bleak first-quarter revenue outlook, pushing the S&P 500 and Nasdaq to close lower on the day.

A slew of megacap earnings will be under investor lens after disappointing forecasts from Intel and Tesla last week prompted concerns about overvaluation of the momentum stocks that had rallied toward the end of last year.

Microsoft, Alphabet, Apple, Meta Platforms, Amazon.com and other major companies such as Exxon Mobil, Chevron, Qualcomm, Merck, Pfizer and Boeing will start reporting earnings from Tuesday.

"With the market at record highs and valuations near the upper-end of its range over the last 20 years, any disappointments from the MAGMAN (big tech) names will likely lead to increased volatility over the coming weeks," said Larry Adam, chief investment officer, Private Client Group.

"Despite a lowered bar, it has been a fairly lackluster start to 4Q23 earnings as the percentage of companies beating on the top and bottom line have been below the historical average, and the magnitude of beats is at the lowest level since 2008."

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 23, 2024. REUTERS/Brendan McDermid/File Photo

With recent data indicating a resilient economy and inflation trending lower, hopes of a Goldilocks scenario - a not too hot or cold economy - have gained steam. The global focus this week will be the year's first U.S. monetary policy decision, expected on Wednesday.

Crucial job reports including those from JOLTS or Job Openings and Labor Turnover Survey and the ADP National Employment will be thoroughly parsed before the Fed's policy decision for clues on the U.S. labor market strength.

Traders' bets reflect most expectations of rate cuts in June, with some for as early as March.

At 5:40 a.m. ET, Dow e-minis were down 29 points, or 0.08%, S&P 500 e-minis were up 1 point, or 0.02%, and Nasdaq 100 e-minis were up 34.5 points, or 0.2%.

Intel rose marginally in premarket trade after the near 12% slide on Friday, while Tesla eyed its second day of recovery, up 1.1% after Thursday's slump.

Other chip stocks Broadcom, Advanced Micro Devices and Nvidia bounced back between 0.7%-1.2% after steep losses last week.

(Reporting by Ankika Biswas in Bengaluru; Editing by Shinjini Ganguli)

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