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Last Updated: 28-Jan-26 09:07 ET | Archive
Tech sector earnings moving the needle more than FOMC decision
Briefing.com Summary:
*The S&P 500 closed at a record high yesterday, fortified by mega-cap stock leadership.
*A positive response to tech sector earnings news has the market poised for a positive open in front of the FOMC decision and key earnings reports after the close.
*The FOMC decision will be released at 2:00 p.m. ET and will be followed by Fed Chair Powell's press conference at 2:30 p.m. ET.
And just like that, the S&P 500 has climbed to a new record high, distancing itself from the "Greenland gap" and overcoming all the other (geo)political noise that includes talk of another partial government shutdown this Saturday.
The overcoming has been driven partly by the "up and coming" broader market, yet the real thrust in recent sessions has been provided by the mega-cap stocks and the semiconductor stocks, both of which are in line to outperform at the start of today's trading.
Currently, the S&P 500 futures are up 13 points and are trading 0.2% above fair value, the Nasdaq 100 futures are up 197 points and are trading 0.8% above fair value, and the Dow Jones Industrial Average futures are down 52 points and are trading 0.1% below fair value.
Hefty gains in Texas Instruments (TXN), Seagate Technology (STX), ASML (ASML), and F5 Networks (FFIV) after their earnings reports have fortified the tech sector's leadership posture, which has also been helped by renewed enthusiasm pertaining to AI growth prospects and hopeful expectations ahead of earnings reports after the close from IBM (IBM), Lam Research (LRCX), Meta Platforms (META), Microsoft (MSFT), and Tesla (TSLA).
Separately, AT&T (T) and Starbucks (SBUX) are garnering some extra praise this morning after their latest earnings results and guidance.
The earnings backdrop, then, has been largely supportive this morning for the equity futures market, which is also keeping tabs on currency moves, another rally in precious metals futures, some saber-rattling by President Trump with respect to Iran, a 10-yr note yield pushing up to 4.25%, and of course today's FOMC decision at 2:00 p.m. ET and Fed Chair Powell's press conference.
The FOMC decision itself should be a non-event. The CME FedWatch Tool shows a mere 2.8% probability of a 25-basis-point cut in the target range for the fed funds rate to 3.25-3.50%. In other words, look for the FOMC to keep the target range for the fed funds rate unchanged at 3.50-3.75%.
It is Fed Chair Powell's press conference, which begins at 2:30 p.m. ET, where the real intrigue lies. Per usual, what he says and how he says it will be a market driver, but frankly, we don't expect him to say much that is too scintillating.
To that end, he said what he felt he needed to say about the Fed's independence after divulging the DOJ's investigation into the renovation costs for the Federal Reserve building. Our expectation is that he won't engage on the topic in the Q&A portion of his press conference other than to refer listeners to what he said previously. In turn, with the economy cranking, initial jobless claims at low levels, and inflation sticking closer to 3.0% than 2.0%, expect him to emphasize that future rate decisions will be on a meeting-by-meeting basis.
What the market knows, however, is that what the Fed chair says will be diluted by the understanding that he won't be Fed chair much longer (his term ends in May) and that a new nominee, who will have a lower rate bias, will soon be nominated by the president.
Today will be an interesting day, but likely not so much because of today's FOMC meeting but because of how the market's stock leaders continue to trade.
