US open: Stocks record modest gains, AMD shares surge to record high
By Iain Gilbert
Date: Wednesday 29 Jul 2020
(Sharecast News) - US stocks opened slightly higher on Wednesday as market participants awaited testimony from the chief executives of some of big tech's most powerful names and the Federal Reserve's interest rate decision later in the day.
As of 1540 BST, the Dow Jones Industrial Average was up 0.15% at 26,417.62, while the S&P 500 was 0.68% firmer at 3,240.22 and the Nasdaq Composite came out the gate 1.00% stronger at 10,505.64.
The Dow opened 38.84 points higher on Wednesday, cutting into some of the losses recorded in the previous session amid stimulus headlines and another slab of corporate earnings.
Amazon, Apple, Facebook and Alphabet were all in focus, with the companies' CEOs set to testify before the House Antitrust Subcommittee later in the day following a year-long probe into alleged anti-competitive practices.
Later on in the day, the Federal Reserve's interest rate decision will be revealed at 1900 BST, followed shortly thereafter by a Fed press conference at 1930 BST.
The Fed is expected to keep short-term interest rates unchanged at near zero as part of an effort to support the still struggling US economy. On Tuesday, the Fed revealed that it would extend emergency lending programs for the rest of 2020.
Oanda's Edward Moya said: "The Fed is expected to remind financial markets that they are ready to do more. The Fed is unlikely to announce any new policy actions and reiterate they are not ready to commit to yield curve control or locking in future rate hikes to overshooting their inflation target.
"The economy is worse off since the last meeting and the Fed should signal they will do more until the uncertainties to the outlook improve."
The tête-à-tête between Republican and Democratic lawmakers over a proposed $1trn stimulus package was also in focus again on Wednesday.
In the corporate space, Starbucks posted a third-quarter loss overnight but raised its fourth-quarter forecast, while AMD stock surged to a record high after posting a better-than-expected quarterly performance and issuing upbeat full-year guidance.
General Motors swung to a quarterly loss as the coronavirus shuttered factories and devastated sales, while General Electric posted slightly better-than-expected second-quarter numbers.
Boeing posted a net loss of $2.4bn and said it would slow aircraft production amid Covid-19-weakened demand, while PayPal and Qualcomm will post earnings after the close.
In macro news, after three weeks of increases, mortgage applications fell 0.8% last week, according to the Mortgage Bankers Association. Despite mortgage rates continuing to sit near record lows, the MBA's unadjusted purchase index also fell 1% last week - but was up 21% compared to last year, marking ten straight weeks of year-on-year increases for purchase activity.
Elsewhere, America's shortfall in trade on goods with the rest of the world fell more quickly than expected last month as export growth picked up. According to the Department of Commerce, in seasonally adjusted terms, the US' trade deficit fell at a month-on-month pace of 6.1% to reach $70.6bn (consensus: -$74.2bn). Exports jumped at a month-on-month pace of 13.8% to reach $102.6bn, while imports were 4.8% higher to $173.2bn.
Lastly, contracts to buy previously owned US homes increased more than expected in June, another indication that the housing market was weathering the Covid-19 pandemic better than the rest of the economy. The National Association of Realtors' pending home sales index rose 16.6% to 116.1 last month. Economists anticipated a 15% increase.
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