Author: Timothy St. John

Stocks on the leading U.S. indices tended mostly down on Tuesday as investors prepared for a round of earnings reports from major companies and the start of the Federal Reserve policy meeting.

The Nasdaq and S&P 500 both set record highs in the previous session, but these indices slipped Tuesday morning in early trading. The S&P 500 fell 0.5% while the Nasdaq dropped 1.1%. The Dow was the only one of the three big indices up, gaining 0.3%.

Stocks could stall today as investors await the outcome of several major earnings reports from Amazon (AMZN), Meta Platforms (META), Microsoft (MSFT), Alphabet (GOOGL), and others. Today also marks the beginning of the Federal Reserve monetary policy meeting, and they are expected to make a decision on policy during Wednesday’s session. JP Morgan and other financial institutions expect the Fed to hold off on rate cuts for now, with only one substantial cut expected for the remainder of the year.

Indices Switch As Stocks Stall

During Monday’s trading session, the Nasdaq and S&P 500 achieved new record highs. The Dow fell slightly that day, but the roles reversed on Tuesday. The Dow shifted higher while the other two leading indices slipped from their highs.

The stock market may continue its current trajectory over the next couple of days, with the S&P 500 and Nasdaq holding near their record highs, especially if the Fed maintains its current interest rate range between 3.50% and 3.75%. Bullish tech stocks should continue to keep the market slightly elevated, but dashed hopes over a new rate cut are likely to lead to a number of dropping stock values in the coming days.

The strongest influencing factor for the market this week is most likely the earnings reports from Magnificent Seven stocks and others. These reports indicate the strength or weakness of the economy and tell a very important story about how impactful the AI focus has been for these tech companies. What many investors and analysts will be looking at is the gross margins for reporting companies and any indications of capex spending that could cut into profits. That has been the issue since late last year when major tech companies and those involved in the AI field were put under the microscope for out-of-control spending.

A few major companies reported their earnings Tuesday morning before the session began. These include UPS (UPS), which fell 3%, General Motors (GM), which gained 5%, and Coca-Cola (KO), which added 2.5%. One of the biggest movers was Spotify (SPOT), which lost 11% in premarket trading. Later today, Robinhood Markets (HOOD) and Starbucks (SBUX) will be reporting their quarterly earnings.

The Dow fell 0.1% while the Nasdaq Composite rose 0.2% on Monday in early trading as a result of climbing oil prices and little progress on peace talks between Iran and the United States.

There is still no resolution to the Iran conflict as a new week starts, and stock traders are hesitating to make big commitments Monday. The S&P 500 is practically unchanged, and oil prices are up 1% for both the Brent crude and West Texas Intermediate benchmarks.

Fighting continued in the Strait of Hormuz over the weekend, and the escalation has led to higher oil prices, increased fear across trading markets, and stalling stock values. On Saturday, an apparent assassination attempt on U.S. President Donald Trump has raised geopolitical tensions even higher, and analysts are worried that it might cause the President to act brashly where Iran is concerned, even though the two situations are not linked.

Big Week for Stocks Overshadowed by Political Unrest

This week is marked by a round of quarterly earnings statements from some of the biggest movers on the market. Five Magnificent Seven stocks are reporting their earnings, and the Federal Reserve will also be announcing its latest policy decision on Wednesday.

Magnificent Seven stocks usually push the market much higher, but they have come out almost flat this year so far as shifting tariffs and the Iran conflict weigh down the market. This week will see the release of earnings reports for Microsoft (MSFT), Meta Platforms (META), Alphabet (GOOGL), Amazon (AMZN), and Apple (AAPL).

Tech stocks have permed well recently but took a beating between February and March. Many of them are still trying to recover from the lengthy downturn they experienced then. The stock market will be closely watched this week to see what kind of impact the Magnificent Seven stocks have, and traders will be judging whether the market is healthy enough for them to make a big move.

The Federal Reserve policy decision is also a major event this week, and while the consensus is that the Fed will likely hold off on a new interest rate cut, there is a chance that they could approve a new cut. Jerome Powell has been hesitant to recommend cuts during his tenure, much to the chagrin of President Trump.

Last week, both the Nasdaq Composite and S&P 500 closed off the last day of trading with record highs. They were helped by a strong tech rally created by strong quarterly earnings from several leading companies. This week’s renewed political turmoil could end the rally, though, and lead to some pullback from bullish stocks.