Investing.com -- Investors await a bevy of quarterly results from big-name U.S. companies this week and assess the outlook for interest rates following strong economic data in recent days. Federal Reserve Chair Jerome Powell says the Fed will take a "prudent" approach to possible rate cuts. Boeing (NYSE:BA) flags a new issue with some of its 737 jet models, in the latest setback for the embattled planemaker.
1. Futures edge lower
U.S. stock futures inched down on Monday, as traders geared up for a wave of corporate earnings this week and gauged fresh interest rate commentary from Federal Reserve Chair Jerome Powell.
By 05:00 ET (10:00 GMT), the Dow futures contract had shed 131 points or 0.4%, S&P 500 futures had lost 15 points or 0.3%, and Nasdaq 100 futures had dipped by 46 points or 0.3%.
The main averages closed in the green on Friday, bolstered by a January labor market report that was far stronger than economists had initially anticipated. While the data pushed back the expected timeline for potential Federal Reserve interest rate cuts this year and subsequently placed upward pressure on U.S. Treasury yields, they were still welcomed by many investors as a sign of resilience in the world's biggest economy.
Also lifting equities in the prior session was a spike in shares in Meta Platforms (NASDAQ:META) and Amazon.com (NASDAQ:AMZN) following bumper earnings from the Facebook-parent and e-commerce giant. Meta's stock price, in particular, posted its largest-ever one-day jump of 20.3%, sending the social media firm's market capitalization up to $1.2 trillion, according to Investing.com.
2. Earnings wave approaches
The staying power of the stock market rally will likely face another test this week when a stream of big-name U.S. companies unveil their latest quarterly results.
On Monday, McDonald's Corporation (NYSE:MCD) is due to report, with observers keen to find out if the burger chain's profits benefited from cost-conscious patrons opting for its lower-priced value meals. Caterpillar (NYSE:CAT), the machinery manufacturer that is often viewed as a bellwether for the American industrial sector, is scheduled to announce its fourth-quarter and full-year returns as well.
Media firms will also be in focus in the coming days, with results ahead from the industry leaders like Walt Disney (NYSE:DIS), Fox, Warner Music Group, and The New York Times Company.
Meanwhile, the spotlight will continue to shine on Big Tech after last week's market-moving crop of reports from titans like Microsoft (NASDAQ:MSFT) and Google-owner Alphabet (NASDAQ:GOOGL). Chinese e-commerce player Alibaba (NYSE:BABA), ride-sharer Uber (NYSE:UBER), and chip designer Arm Holdings (NASDAQ:ARM) are slated to report this week.
Hopes are high that the solid economic signals will be reflected in the corporate numbers. According to LSEG data cited by Reuters, S&P 500 earnings are seen climbing by almost 10% in 2024, accelerating from an increase of 3.6% last year.
3. Powell says Fed can be "prudent" on rate cuts
The strong U.S. economy can give U.S. central bankers time to take a "prudent" approach to possible benchmark interest rate reductions, Federal Reserve Chair Jerome Powell said in an interview with CBS news program "60 Minutes" on Sunday.
Powell added that he would like to "see the data confirm" that inflation -- the major focus of an aggressive series of Fed policy tightening that has pushed borrowing costs up to more than two-decade highs -- is cooling back down to the Fed's stated 2% in a "sustainable way."
His comments underline a cautious sentiment among Fed officials, who are keen to avoid the risk of reigniting price gains by slashing rates too quickly. Last week, the Fed held rates at a target range of 5.25% to 5.50%, and stressed that they will need to see more evidence of easing inflation before they start to roll out cuts.
"We have to balance the risk of moving too soon...or too late," Powell noted.
He also refrained from declaring that the Fed was all but certain to achieve a "soft landing," a scenario in which elevated price growth is defeated without sparking steep job losses and a broader economic downturn. Instead, Powell called the resilience of the U.S. economy "historically unusual."
4. Boeing flags new fuselage issue could delay 737 deliveries
Shares in Boeing were lower in premarket U.S. trading on Monday, after the embattled planemaker warned that a fresh issue in some fuselages of its 737 jets could lead to the "near-term" delay of some deliveries.
In a memo to employees on Sunday, Boeing Commercial Airplanes President Stan Deal flagged that two holes on these models may not have been drilled exactly to the company's requirements.
Deal said that the problem is "not an immediate flight safety" concern, adding that all 737s can continue to operate safely. However, he conceded that Boeing will have to perform "rework" on about 50 undelivered aircraft.
"[T]his is the only course of action given our commitment to deliver perfect airplanes every time," Deal said. "The days we are setting aside in the 737 program will allow time for our teams to complete the inspections and, if needed, perform the necessary rework."
Scrutiny over the safety of Boeing jets has been rising since a dangerous mid-air door plug breach on one of its 737 Max 9 planes operated by Alaska Airlines last month. In the wake of the incident, Boeing has not offered a forecast for its 2024 financial year, stating that it still has "much to prove" to win back the confidence of regulators and passengers.
5. Crude choppy
Crude prices were volatile on Monday, with investors eyeing the delayed timing of possible Fed interest rate cuts and ongoing violence in Middle East.
By 05:00 ET, the U.S. crude futures traded 0.3% lower at $72.08 a barrel, while the Brent contract dropped 0.2% to $77.21 per barrel. Both of the benchmarks slipped at the end of last week due in part to the blockbuster U.S. jobs report, which pushed out expectations for rate reductions this year. In theory, an extended period of tighter financial conditions could weigh on demand in the world's biggest oil consumer.
Analysts at ING said that hopes for a ceasefire between Israel and Hamas also contributed to some of Friday's weakness. But they argued that a halt in hostilities "does not appear imminent."
The ING analysts added that, despite further U.S. and U.K. attacks on Yemen-based Houthis over the weekend, oil supply "remains unaffected" and the crude market "is largely balanced" in the first quarter thanks in part to the OPEC producer group sitting on a large amount of spare capacity.
"However, this could quickly change if tensions spread to other parts of the Middle East," they said.