The Monday Market Minute

  • Dow Industrials component Caterpillar set the pattern for the day.
  • The Dow ended near lows of the day.
  • Nasdaq slammed on weakness in Facebook and Twitter. 

Market Snapshot

Stronger-than-expected earnings from Caterpillar Inc. (CAT)  failed to boost overall sentiment Monday, as the Dow gave up early gains to end near its lows of the day while the Nasdaq moved sharply lower on weakness in techs. 

The Dow Jones Industrial Average   fell 144 points, or 0.6% to 25,307, while the S&P 500  lost 0.58%. The Nasdaq  , fell 1.4%. 

Caterpillar shares fell 1.9% after trading higher earlier on Monday. 

Facebook Inc.'s (FB)  troubles continued as the stock ended down 2.1% on continued fallout from its $119 billion slide last week. Sub-par quarterly results from FAANG member Netflix Inc. (NFLX) and chipmaker Intel Corp. (INTC)  also put investors on the defensive heading into the end of the week on Wall Street, even though forecast-smashing numbers from Amazon Inc. (AMZN) steadied nerves somewhate.

Investors won't have to wait long to find out if tech will continue to drive near-term sentiment, however, with Apple Inc. (AAPL) set to report its fiscal third quarter earnings after the close of trading on Tuesday. FactSet estimates suggest the Cupertino, Calif.-based group to report Q3 EPS of $2.16 per share, a 29% increase from the same period last year, on sales of $52.3 billion.

Apple shares fell 0.6%.

The iphone maker's update comes amid another busy week for corporate reporting, with earnings expected from 140 companies listed on the S&P 500 including Lowe's (L) , Pfizer Inc. (PFE) , Proctor & Gamble Co. (PG) , Telsa Inc. (TSLA) , CBS Corp. (CBS) and Warren Buffet's Berkshire Hathaway Inc. (BRK.A) .

Overall, corporate earnings are set to grow at 22.7% for this earnings season, the second-fastest pace in the past eight years, bested only by the 23% advance recorded over the first three months of the year as the broader economy records its best GDP growth since mid-2014.

"I don't think this is a one- or two-year phenomenon. I think we definitely are in a period of four or five years of sustained 3 percent growth at least," U.S. Treasury Secretary Steven Mnuchin told Fox News Sunday. 

US GDP rose by 4.1% SAAR in Q2, or 2.8% y/y. That's the fastest rate of growth in 3 years. I've never really understood why so many have been so bearish on the US economy for so long. Hopefully also economists are "marked-to market". pic.twitter.com/Bwsjl5DCcX

— Teis Knuthsen (@TeisKnuthsen) July 30, 2018

Global stocks drifted lower Monday, with tech shares weighing down benchmarks in Europe and Asia following the disappointing earnings from the FAANG complex last week.

Rate markets will also have plenty to chew on this week, with consumer confidence figures Tuesday and July payroll data Friday, sandwiched between a two-day Fed meeting that begins tomorrow in Washington amid recent criticism for its interest rate policy from President Trump.

The CME Group's FedWatch tool suggests little chance of a move on rates this week, but is pricing in an 88.7% chance of a hike in September and a 63.7% chance that the key Fed Funds rate will hit 2.25% by the end of the year. 

Changes to the #Fed's communication this week are set to be modest, with a slight risk of a hawkish twist. More bear-flattening of the USD curve is the most likely outcome. https://t.co/gEHVPtwQMc pic.twitter.com/JYDsXgXAnv

— Jan von Gerich (@JanVonGerich) July 30, 2018

Global oil markets were firmer as prices rose higher amid some concern that Saudi Arabia's suspension of crude shipments through the Red Seas' Bab al-Mandeb straight will filter through and delay to deliveries in other parts of the world. A strike in the North Sea by oil rig workers on a platform owned by France's Total SA (TOT) could further bottleneck supplies. 

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