US index futures showed modest gains on Tuesday. Dow e-minis hovered near zero, while S&P 500 e-minis edged up 0.2%, and Nasdaq 100 e-minis climbed 0.3%. Microsoft shares dipped slightly in premarket trading ahead of its earnings report, while other tech giants like Apple, Amazon, Meta Platforms, Alphabet, and Tesla saw gains.

The Federal Reserve's two-day meeting  kicks off today. Investors are laser-focused on Wednesday's policy decision, hoping to see confirmation of an interest-rate cut in September, or even two more cuts before year-end. Before that, Microsoft, Advanced Micro Devices (AMD), and Starbucks are set to release their quarterly earnings after the market closes today.

Yesterday, the indexes wobbled, ending near the bottom of their daily ranges. The Dow Jones slipped 0.12%, while the S&P 500 eked out a 0.08% gain, and the Nasdaq rose 0.19%, buoyed by the strong performance of five of its “magnificent seven” (Apple, Microsoft, Amazon, Alphabet, and Tesla). Meta ended flat, and Nvidia dropped 1.3%, marking its fourth decline in five sessions. The narrative of artificial intelligence driving a bullish super-cycle in the stock market is a bit bruised but not entirely broken. The market eagerly awaits earnings reports from Microsoft (today), Meta (tomorrow evening), and Apple and Amazon (Thursday evening) to fine-tune its forecasts. Currently, there's no clear trend: investors are reluctant to abandon the tech darlings of the past 15 years and hesitant to fully embrace discounted stocks, which are expected to benefit from falling rates and a potential Trump comeback.

Today's earnings deluge includes a diverse array of sectors: aerospace (Airbus, Leonardo), finance (PayPal, Intesa, Standard Chartered), alcohol (Diageo, Davide Campari), pharmaceuticals (Merck & Co, Pfizer), energy (BP Plc, Philips 66), consumer goods (L'Oréal, Mondelez, Procter & Gamble), and, of course, tech (Microsoft, AMD). In other news, the ECB, which cut its key interest rate in June, faces a tough decision on whether to continue lowering rates. Today's data shows the eurozone economy grew by 0.3% in the second quarter, exceeding expectations. However, disparities among member countries pose challenges for the ECB. Germany's GDP fell by 0.1%, while France and Italy saw modest growth. Spain recorded one of the highest growth rates at 0.8%. The overall growth rate for the Eurozone remains lower than that of the U.S. and China. The IMF forecasts a 0.9% growth for the Eurozone in 2024, compared to 2.6% for the U.S. and 5% for China.

In the US, consumer confidence will be scrutinized via the Conference Board index later today. On the political front, the search for a running mate for Kamala Harris is said to be focusing on three main candidates. In Italy, Prime Minister Giorgia Meloni has offered to negotiate improved trade relations between China and the EU. The Venezuelan opposition is contesting Nicolas Maduro's election victory. In China, the Politburo has deemed it necessary to strengthen counter-cyclical adjustments with a proactive fiscal policy and prudent monetary policy, as demand is insufficient and the implementation of the development plan is being thwarted. In Asia-Pacific this morning, indices ended in the red, except in India and Japan, which ended the session slightly up. In Europe, all indices are in the green, except in London, where investors are cautiously awaiting this week’s rate decision from the BoE.

Today's economic highlights:

The first estimate of German inflation for July, the FHFA house price index and the Conference Board consumer confidence index and JOLTS job offers are on the agenda today.

The dollar is slightly up to EUR 0.9254 and GBP 0.7794. The ounce of gold is little changed at USD 2,388. Oil continues to struggle, with North Sea Brent at USD 78.13 a barrel and US light crude WTI at USD 74.57. The yield on 10-year US debt has reached 4.18%. Bitcoin is trading at USD 66,700.

In corporate news:

  • Apple has relied on chips designed by Google parent company Alphabet, rather than industry leader Nvidia, to build two key components of its artificial intelligence (AI) software infrastructure for its future suite of AI tools and functions, shows a research paper from the iPhone maker published on Monday.
  • Meta Platforms on Monday announced plans to roll out a new tool called AI Studio that will enable users to create, share and design personalized AI chatbots.
  • Delta Air Lines has hired a law firm and will seek compensation from Microsoft and Crowdstrike following the recent giant computer failure that disrupted flights worldwide, CNBC reported on Monday. CrowdStrike is down 4.7% in pre-market trading.
  • A US appeals court on Monday blocked a U.S. Department of Transportation measure requiring airlines to disclose service fees to consumers at the same time as ticket prices, in a setback for Joe Biden's administration.
  • PayPal raised its full-year adjusted profit forecast for the second time on Tuesday, betting on buoyant consumer spending for the back-to-school season and the upcoming holiday season, while cost-cutting measures improved the group's margins.
  • Pfizer- The US drugmaker raised its full-year profit forecast on Tuesday after reporting better-than-expected sales of its COVID-19 vaccine. The stock gained 3.7% in pre-market trading.
  • Chesapeake Energy - The natural gas producer announced on Monday that it posted a net loss in the second quarter, compared with a profit in the previous year, against a backdrop of lower production and pressure on prices.
  • Phillips 66 reported a drop in quarterly earnings on Tuesday, penalized by a collapse in margins amid rising refining capacity worldwide.
  • Stanley Black & Decker exceeded Wall Street expectations on Tuesday with second-quarter earnings, thanks to higher product margins following cost-cutting measures.
  • F5 - The cybersecurity and cloud services company jumps 14% in pre-market trading after announcing that it expects results for its fiscal fourth quarter to exceed Wall Street expectations.
  • Vista Outdoor gains 3% in pre-market trading as the company reviews its strategic options, including a possible divestment of its Revelyst outdoor sports equipment division.

Analyst recommendations:

  • 3M Company: Deutsche Bank upgrades to buy from hold with a price target raised from USD 110 to USD 150.
  • Abbott Laboratories: Edward Jones downgrades to hold from buy.
  • Aon Plc: Keefe Bruyette & Woods upgrades to outperform from underperform with a price target raised from USD 313 to USD 380.
  • Gentex Corporation: BNP Paribas Exane downgrades to neutral from outperform with a price target reduced from USD 42 to USD 34.
  • Healthcare Realty Trust: Wells Fargo downgrades to underweight from equalweight with a price target reduced from USD 17 to USD 16.
  • Integra Lifesciences Holdings Corporation: Citi downgrades to sell from neutral with a price target reduced from USD 30 to USD 23. 
  • Stellantis N.v.: Nomura upgrades to buy from neutral with a price target reduced from EUR 24 to EUR 21.
  • Dexcom, Inc.: Redburn Atlantic maintains its neutral recommendation and reduces the target price from USD 130 to USD 80.
  • First Citizens Bancshares, Inc.: Jefferies maintains its buy recommendation and raises the target price from USD 2005 to USD 2460.
  • Lattice Semiconductor Corporation: Deutsche Bank maintains its buy recommendation and reduces the target price from USD 82 to USD 56.
  • Murphy Usa Inc.: Jefferies maintains its buy recommendation and raises the target price from USD 460 to USD 590.
  • Olin Corporation: Piper Sandler & Co maintains its overweight recommendation and reduces the target price from USD 75 to USD 57.
  • Prosperity Bancshares, Inc.: Citigroup maintains its buy recommendation with a price target raised from USD 66 to USD 82.
  • Qorvo, Inc.: Barclays maintains its equalweight recommendation and raises the target price from 100 to USD 125.
  • Skyworks Solutions, Inc.: Barclays maintains its equalweight recommendation and raises the target price from USD 85 to USD 115.
  • Symbotic Inc.: Citigroup maintains its buy recommendation and reduces the target price from USD 62 to USD 49. 
  • Tenet Healthcare Corporation: Wells Fargo maintains its overweight rating and raises the target price from USD 145 to USD 175.
  • Tesla, Inc.: Daiwa Securities maintains a neutral recommendation with a price target raised from 180 to USD 225.
  • Convatec Group Plc: Investec upgrades to buy from hold with a target price of GBX 307.
  • Howden Joinery Group Plc: RBC Capital downgrades to sector perform from outperform with a price target raised from GBX 920 to GBX 980.
  • Oxford Nanopore Technologies Plc: Stifel downgrades to sell from hold with a target price of GBX 100.
  • Sthree Plc: HSBC downgrades to hold from buy with a price target reduced from GBP 5.05 to GBP 4.45.
  • Bank Of Montreal: RBC Capital downgrades to sector perform from outperform with a price target reduced from CAD 124 to CAD 118