Article published at 9:10 a.m. CT
JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Stocks turn lower as Mideast conflict flares up
- Investors await Microsoft and Meta reports after the bell
- Fed expected to hold interest rates steady
This will be a heavy news day with a slew of earnings already released before the bell and another batch scheduled to hit after the session ends. The Federal Reserve’s rate decision is also on today’s busy agenda, coming out early this afternoon.
The main event, however, is likely to come when Microsoft and Meta open their books after the session ends. Wall Street is looking for robust results on both the top and bottom lines for Microsoft. The growth rate of its Azure cloud business is of particular interest, as it’s projected to come in as much as 40% higher. There’s a 7% implied move in either direction for shares of Microsoft, as investors continued to play the upside with 400 and 420 calls on options contracts the last few days.
Meta investors are setting their sights on the company’s capital expenditures outlook, which has become a thorn in some investors’ sides who worry about the return on pricey artificial intelligence investments. Meta also has an implied move of 7% and we’ve seen a lot of action in the 600 and 630 calls. As a side note, Meta has delivered earnings and revenues higher than expectations in the last two quarters, but shares have fallen both times. Shares were off 0.69% early on.
The markets are turning to the downside in early trading and crude oil prices are reversing their recent slides with the war-risk premium back on the table. WTI Crude Oil prices are higher by 6.7%, moving into the $84-and-change range. That’s reversing yesterday’s 4.06% decline to settle at $79.26 a barrel. Once the U.S. military confirmed Iranian strikes and retaliated, prices quickly moved to the upside in the after hours.
That’s pressuring the broader markets with the S&P 500 Index and the Nasdaq Composite both just slipping off the flat line in low double digits in early trading. The Dow Jones Industrial Average, which has moved higher in recent sessions, is giving up 0.86% early on.
The Federal Reserve is slated to announce its decision on the direction – or lack of – on interest rates at 2 p.m. ET. The CME FedWatch tool is leaning toward keeping the rates at 3.50% to 3.75%, with a 35.8% chance of a rate hike. That represents a hawkish minority who think the Fed may surprise Wall Street with a hike, given Chairman Kevin Warsh’s strong stand on keeping inflation in check.
What’s more, there’s been no hint of what direction Warsh and the Federal Open Market Committee might lean, which follows Warsh’s keep-it-close-to-the-vest approach on the committee’s thinking. Some market watchers also expect some notable dissension among committee members. At the end of the day, we have to go with the probabilities that the market tells us, and that’s that rates will stand pat.
The earning reports bustle started early with mixed earnings results from Procter & Gamble. The household products giant turned in profits that were slightly ahead of Wall Street’s expectations, but revenue fell short. P&G noted consumers were backing off of discretionary spending with the exception in the beauty segment. That keeps to the long-time notion of the “lipstick index,” which holds that consumers will stick to their beauty purchases even when spending is tightened elsewhere.
Besides Microsoft and Meta, other mega-cap stocks reporting earnings after the bell include Qualcomm and Lam Research. A host of other earnings are coming too: Robinhood Markets, Starbucks, Chipotle, MGM Resorts and Carvana.
Visa shares took a turn to the downside despite second-quarter earnings results late Thursday that beat on the both the top and bottom lines. Its payments segment – juiced by the “FIFA bump” – jumped 10% to a record $4.66 trillion. However, its forward guidance on fiscal 2026 earnings included a 17% increase in operating expenses. The company also said it will cut 7% of its workforce and use AI to streamline company workflows. Shares were off 2.2% in early trading.
Shares of Ford Motor Co. are moving up 5.8% after the automobile maker late Tuesday reported a second-quarter loss, mostly tied to adjusted earnings and revenues that bested Wall Street’s projections despite the lower revenues. The automaker’s upbeat forecast boosted the stock, raising its full-year outlook to a range of $10 billion to $11 billion from previous guidance of $8.5 billion to $10.5 billion. Free cash flow was upped too, fluctuating from $6 billion to $7 billion, up $1 billion on both ends. The projections echo the higher auto market prices in recent years, which are averaging about $50,000 per car.
Apple shares hit an intraday milestone yesterday as its market capital surpassed $5 trillion before settling at $4.99 trillion, as the world’s most valuable publicly held company. Apple is the second company to hit that mark; Nvidia tapped it last October. Apple pushed Nvidia to the No. 2 market cap spot Monday, and its shares are edging lower in early trading. The iPhone maker’s earnings are on the docket after Thursday’s close.
Happy trading!
2026 Cboe Exchange, Inc. All rights reserved.
The information provided is for general education and information purposes only. No statement provided should be construed as a recommendation to buy or sell a security, future, financial instrument, investment fund, or other investment product (collectively, a “financial product”), or to provide investment advice.
