Stocks moved lower in early trading this week as investors parsed through a slew of Q2 earnings results while awaiting the conclusion of the Federal Reserve’s two-day meeting on Wednesday afternoon. This week saw blowout earnings from tech giants Apple (AAPL), Microsoft (MSFT), and Alphabet (GOOG). Apple’s iPhone sales grew by 50%, Google’s YouTube revenues doubled, and Microsoft executed $10 billion in share repurchases. Overseas, the MSCI China index fell more than 5% as investors responded to increasingly tight regulations. The news from China adds to the concerns about global economic recovery, given the rise in the COVID-19 delta variant and central-bank talk of tightening policy.  On the data front, the Conference Board’s gauge of consumer confidence came in better than anticipated. Separately, a preliminary reading showed durable goods orders increased by less than expected in June, though the prior figure was upwardly revised by nearly 1% to reflect a robust 3.2% gain. Housing continues to remain strong as Standard & Poor’s said on Tuesday that its national home price index posted a 16.6% annual gain in May – the highest reading in more than 30 years. Despite plenty of earnings and economic data, the main event this week is the Fed. The Federal Open Market Committee is set to release a statement on Wednesday afternoon followed by a press conference with Chairman Jerome Powell. Investors will be looking for an update on the central bank’s plans to start reducing its bond purchases, the first major step in policy tightening. The Fed is expected to start trimming its bond purchases later this year or early next year, however the spreading COVID-19 delta variant could lead the central bank to communicate a more cautious outlook.

Source: GSAM, CNBC, JPM, Factor Investor

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