Wall Street Futures Edge Higher as Fed Rate Cut Bets and Earnings Reports Drive Market Sentiment

U.S. stock futures inched higher on Tuesday, bolstered by growing optimism over potential Federal Reserve interest rate cuts, while investors shifted their focus to a fresh batch of corporate earnings reports.

At 6:51 a.m. ET, S&P 500 E-minis were up 16.75 points, or 0.26%, Nasdaq 100 E-minis gained 90 points, or 0.39%, and Dow E-minis showed a slight dip of 1 point, trading at 44,302.

Strong Recovery from Wall Street

Wall Street surged on Monday, posting its strongest gains in over two months, recouping losses from a Friday selloff driven by disappointing July jobs data and substantial downward revisions to prior employment numbers. This fueled expectations for a potential rate cut by the Federal Reserve in September.

According to CME Group’s FedWatch tool, investors are now placing a 90% chance on a rate cut in September, a significant increase from just 63.3% last week. This shift reflects mounting optimism for at least two quarter-point cuts before the year’s end.

Corporate Earnings Take Center Stage

On Tuesday, several major companies are set to report earnings, including Advanced Micro Devices (AMD), Snap, and Rivian (RIVN). Early premarket movements saw Pfizer (PFE) climb 3%, following a revision of its annual profit forecast upwards. Palantir Technologies (PLTR) also rose 6.1% after it raised its revenue projections for the year.

However, Hims and Hers Health, an online telehealth company, saw a sharp 13% drop after failing to meet analysts’ expectations for second-quarter revenue, primarily due to a decline in subscribers for its weight-loss drugs.

Political Uncertainty Weighs on Investor Sentiment

Concerns over the integrity of U.S. economic data resurfaced after President Donald Trump’s decision to fire the head of the Bureau of Labor Statistics (BLS), which is responsible for compiling the country’s labor data. This decision, coupled with the surprise resignation of Federal Reserve Governor Adriana Kugler, has raised investor concerns about potential political interference in economic data. Trump has consistently criticized Fed Chair Jerome Powell for not lowering interest rates sooner.

Global Trade Tensions Impact Markets

As markets continue to digest these developments, investors are also keeping an eye on trade-related concerns. Trump’s threats to raise import tariffs on India in retaliation for its purchases of Russian oil added to the market’s uncertainty. India rejected these threats, calling them “unjustified” and vowing to protect its economic interests. Markets are also focused on whether Trump will extend the trade truce with China, which is set to expire on August 12, or let tariffs rise again, potentially up to triple-digit rates.

Corporate Earnings Reflect Tariff Concerns

Corporate earnings are also feeling the impact of trade tensions. Caterpillar (CAT) dropped 4% after reporting lower second-quarter profits, citing sluggish demand for construction equipment and higher costs due to U.S. tariffs. On the other hand, DuPont (DD) gained 6.7% after forecasting positive third-quarter results, driven by strong demand in electronics and healthcare sectors.

Key Economic Data Ahead

Today, the final July reading of S&P Global’s Purchasing Managers’ Index (PMI) will be released at 9:45 a.m. ET, followed by the Institute for Supply Management’s non-manufacturing PMI at 10:00 a.m. ET. These reports are expected to provide further insight into the health of the U.S. economy, influencing investor sentiment ahead of key trade and monetary policy decisions in the coming weeks.

With global trade uncertainties, the prospect of Fed rate cuts, and corporate earnings season in full swing, markets are expected to remain volatile as traders balance economic concerns with opportunities in specific sectors.