Stock futures rise as U.S.-EU trade deal kicks off a hectic week for markets: Live updates

U.S. equity futures advanced Sunday evening as Wall Street geared up for a pivotal week driven by several key catalysts. Investors will closely watch earnings from major tech companies like Meta, Microsoft, Amazon, and Apple for insights into AI spending, while the Federal Reserve's meeting will be scrutinized for clues on future rate cuts despite an expected hold. Further market focus will be on the anticipated rise in PCE inflation (to 2.4% YoY) and critical jobs data, all set against a backdrop of recent positive trade developments, including reduced EU tariffs, which contributed to last week's market gains.

Analysis

U.S. equity futures are pricing in a positive start to a pivotal week, building on recent momentum that saw the S&P 500 and Nasdaq Composite close at record highs. The bullish sentiment is supported by a new U.S.-EU agreement that lowers tariffs to 15%, de-escalating a significant trade-related risk. However, the market faces a dense schedule of potential catalysts. The primary focus will be on the busiest week of earnings season, with over 150 S&P 500 companies reporting, including tech giants Meta, Microsoft, Amazon, and Apple. As highlighted by Morgan Stanley, investor reaction will be principally rooted in forward guidance, especially commentary on AI spending and the impact of trade policies. Concurrently, the Federal Reserve's policy meeting, while expected to hold rates at the current 4.25%-4.5% range, will be closely watched for signals of a potential rate cut in September. This outlook will be shaped by key economic data, including the PCE inflation index, which is forecast to rise to 2.4% year-over-year, and the July jobs report, which is anticipated to show a slowdown in hiring to 115,000 new jobs.

Key Decisions for Investors

• Investors should scrutinize the forward guidance from 'Magnificent Seven' earnings, as commentary on AI spending and future demand will be more critical than headline results in sustaining the tech-led rally.
• Prepare for potential market volatility surrounding the Federal Reserve's statement and key economic data, as conflicting signals from an expected rise in PCE inflation and a slowdown in the jobs report will heavily influence rate cut expectations.
• While the reduced EU tariff risk is a positive macro development, with indices at record highs and sentiment strongly positive, it may be prudent to watch for 'sell the news' reactions to this week's high-stakes earnings and Fed events.