Market Analysis

The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to move back to the upside following the pullback seen in the previous session.

The upward momentum may partly reflect optimism about corporate earnings news ahead of the release of a number of big-name companies this week.

Coca-Cola (KO), McDonald's (MCD), Alphabet (GOOGL), Microsoft (MSFT), Boeing (BA), Pfizer (PFE), Apple (AAPL), Amazon (AMZN), and Intel (INTC) are among just a few of the companies due to report their quarterly results in the coming days.

Trading activity may be somewhat subdued, however, as traders look ahead to the Federal Reserve’s monetary policy decision on Wednesday.

CME Group’s FedWatch tool is currently indicating a 77.5 percent chance of a 75 basis point interest rate hike and a 22.5 percent chance of a 100 basis point rate hike.

Traders are also likely to keep an eye on reports on consumer confidence, new home sales, durable goods orders, second quarter GDP and personal income and spending.

After turning in a mixed performance early in the session, the major U.S. stock indexes all moved to the downside over the course of the trading day on Friday. The tech-heavy Nasdaq led the way lower and was eventually joined in negative territory by the Dow.

The major averages all closed in the red, although the Nasdaq underperformed its counterparts by a wide margin. While the Nasdaq tumbled by 225.50 points or 1.9 percent to 11,834.11, the S&P 500 slumped 37.32 points or 0.9 percent to 3,961.63 and the Dow fell by 137.61 points or 0.4 percent at 31,899.29.

With the pullback on the day, the major averages gave back ground after ending Thursday's trading at their best closing levels in over a month but still posted strong gains for the week.

For the week, the Nasdaq spiked by 3.3 percent, the S&P 500 surged by 2.5 percent and the Dow jumped by 2.0 percent.

A steep drop by shares of Snap Inc. (SNAP) weighed on the tech-heavy Nasdaq, with the Snapchat parent plunging by 39.1 percent to a two-year closing low.

The nosedive by Snap came after the company reported disappointing second quarter results and declined to provide guidance due amid "incredibly challenging" conditions. Snap also announced plans to "substantially slow" its rate of hiring.

Social media giant Twitter (TWTR) also reported second quarter results that missed analyst estimates, citing advertising industry headwinds and uncertainty related to the pending acquisition by Elon Musk.

Computer hardware stocks also showed a substantial move to the downside on the day, dragging the NYSE Arca Computer Hardware Index down by 3.1 percent. The index ended Thursday's trading at its best closing level in over a month.

Seagate Technology (STX) helped lead the sector lower after the disk drive maker reported weaker than expected fiscal fourth quarter results and provided disappointing guidance.

Significant weakness was also visible among semiconductor stocks, as reflected by the 2.6 percent slump by the Philadelphia Semiconductor Index. The index also pulled back off a one-month closing high.

Outside of the tech sector, airline stocks extended the sell-off seen during trading on Thursday, resulting in a 2.8 percent nosedive by the NYSE Arca Airline Index.

Steel, banking, and oil stocks also saw notable weakness on the day, while interest rate-sensitive utilities stocks bucked the downtrend.

The pullback on Wall Street also came as traders looked ahead to next week's highly anticipated monetary policy decision by the Federal Reserve.

The Fed is widely expected to raise interest rates by at least 75 basis points as part of its ongoing efforts to combat elevated inflation.

"Corporate America showed a major pivot this earnings season and that is to spend less on and to ease up on hiring," said Edward Moya, Senior Market Analyst at OANDA.

He added, "With Wall Street remaining so pessimistic that we will retest the summer lows, it will be hard to see stocks muster up a meaningful rally until investors become confident they can see the end of the Fed's tightening cycle."

Commodity, Currency Markets

Crude oil futures are jumping $1.43 to $96.13 a barrel after tumbling $1.65 to $94.70 a barrel last Friday. Meanwhile, after climbing $14 to $1,727.40 an ounce in the previous session, gold futures are slipping $4.60 to $1,722.80 an ounce.

On the currency front, the U.S. dollar is trading at 136.63 yen versus the 136.12 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0237 compared to last Friday’s $1.0213.

Asia

Asian stocks ended broadly lower on Monday as weak business activity data from Europe and the United States coupled with anxiety about China's property market added to worries about a recession.

Bond yields retreated amid bets that the U.S. Federal Reserve will likely slow the pace of interest rate increases after front-loading policy with a second straight 75 basis point rate hike on Wednesday.

Investors also awaited earnings from Google's Alphabet and technology titan Apple this week for additional clues on the economic outlook.

U.S. Treasury Secretary Janet Yellen said on Sunday that a recession is not inevitable. Both the dollar and gold were little changed in Asian trading, while oil extended a recent losing streak on worries over fuel demand.

Chinese shares fell notably as investors awaited progress in a potential restructuring plan for China Evergrande Group. The benchmark Shanghai Composite Index fell 0.6 percent to 3,250.39, while Hong Kong's Hang Seng Index closed 0.2 percent lower at 20,562.94.

Japanese shares ended lower as investors anxiously await this week's U.S. GDP data and the Fed's policy meeting. The Nikkei 225 Index dropped 0.8 percent to 27,699.25 to snap a seven-day winning streak, while the broader Topix ended 0.7 percent lower at 1,943.21. Nikon, Eisai and Yaskawa Electric lost 3-4 percent.

Seoul stocks eked out modest gains on institutional buying. The Kospi rose 0.4 percent to 2,403.69, with automakers and car parts suppliers leading the surge. Hyundai Motor, Kia and Hyundai Mobis gained 2-3 percent.

Australian markets fluctuated before finishing marginally lower ahead of second-quarter consumer price data due on Wednesday. Tech stocks led losses, with EML Payments plunging more than 22 percent.

Higher iron prices helped lift miners, with BHP and Rio Tinto closing up 1.6 percent and 0.9 percent, respectively. Diversified miner South32 gained 0.9 percent after a solid Q4 update.

Europe

European stocks have moved mostly higher on Monday, as investors brace for a busy week of corporate earnings and a policy meeting of the U.S. Federal Reserve, with economists expecting a 75 basis point rate hike to combat inflation.

Closer to home, hawkish ECB policymaker Robert Holzmann told the Austrian public broadcaster ORF on Sunday that the Governing Council will consider the economic landscape across the euro zone before deciding on the next tightening step in September.

The European Central Bank raised interest rates by a bigger-than-expected 50 basis points last week, marking its first hike in 11 years.

In economic news, survey results from Ifo Institute showed that Germany's business confidence deteriorated more than expected in July.

The business confidence index came in at 88.6 in July as both current assessment and expectations of firms deteriorated in the month. The reading was forecast to fall to 90.2 from 92.2 in June.

While the German DAX Index is up by 0.5 percent, the French CAC 40 Index is up by 0.4 percent and the U.K.’s FTSE 100 Index is up by 0.3 percent.

French telecom firm Orange rose nearly 2 percent after it signed a binding agreement with MasMovil to combine their businesses in Spain.

Volkswagen AG shares tumbled 2.5 percent. The German automaker has appointed Oliver Blume takes over as new Chairman with effect as of 1 September 2022.

Automotive and industrial supplier Schaeffler was gaining 1.2 percent after it agreed to buy Ewellix Group from Triton Fund V for 582 million euros.

Spain's Telefonica jumped 2.3 percent after it agreed to sell a slice of its rural fibre network in Spain to a consortium for around 1 billion euros ($1.02 billion).

Dutch medical equipment firm Philips plummeted 11 percent after missing its Q2 forecasts by a significant margin.

U.S. Economic Reports

The Treasury Department is scheduled to announce the results of this month’s auction of $45 billion worth of two-year notes at 1 pm ET.