5 Key Factors Influencing the Stock Market on July 31, 2024

5 things to know before the stock market opens Wednesday

Here are five key things investors need to know to start the trading day: The S&P 500 and Nasdaq Composite moved lower on Tuesday as the rotation out of megacap technology stocks continues. The broad market index fell around 0.6%, and the Nasdaq declined even more at 1.2%. On the other hand, the Dow Jones Industrial Average saw gains, closing the session out 0.3% higher. This comes amid a strong earnings season so far, with around 80% of the 230 S&P 500 companies that have already posted results beating expectations, per FactSet data. According to Mona Mahajan, Edward Jones principal and senior investment strategist, earnings growth is "broadening." "We do think that with tech earnings, the bar is high," she said. "If we get any whiffs of a cooling in AI spending, we could see the stocks pull back a bit. But we've already gone through a decent correction."

5 Things to Know Before the Stock Market Opens

Nisha Gopalan is the Senior Overnight Assignment Editor for Investopedia News. She is an award-winning financial journalist who has worked in London, where she is currently based, and Hong Kong. She previously worked at The Wall Street Journal and Bloomberg. The Federal Reserve is widely expected to keep its key interest rate steady at 23-year highs as it concludes its two-day meeting, although all eyes will be on whether Fed chair Jerome Powell signals a September rate cut; Meta Platforms (META) is expected to report higher second-quarter results after the closing bell, with investors focused on its ad revenue strength and artificial intelligence (AI) spending and plans; Arm Holdings (ARM) is surging in premarket trading as investors watch for updates on its royalty revenue and an AI chip it is developing; shares of Dutch semiconductor-gear maker ASML Holding (ASML) are soaring in premarket trading as the U.S. reportedly prepares to exempt chip-equipment manufacturers from the Netherlands, Japan, and South Korea from exports curbs to China; and Microsoft (MSFT) is falling after its cloud growth slowed and missed Wall Street forecasts. U.S. stock futures are rising ahead of today's tech earnings and hopes for a clear signal of a rate cut. Meanwhile, the Bank of Japan, which ended its negative interest rate policy in March, raised its benchmark rate to the highest level since 2008. Here's what investors need to know today. The Federal Reserve is widely expected to maintain its influential interest rate at its current 23-year-high level when officials make policy decisions on Wednesday, but investors' focus will be on chair Jerome Powell's signals on when cuts may start. Market participants widely expect the central bank to start cutting the fed funds rate in September as the Fed gains confidence that inflation is under control -- its long-stated condition to kick off easing. Price pressures have been moderating and the job market is continuing to soften. The Fed held the rate at near zero during the pandemic to stimulate the economy with easy money, then ratcheted it up from March 2022 to slow the economy and stifle inflation, and has held it since July at the highest levels since 2001. Meta Platforms (META) is expected to report higher second-quarter results after the closing bell on Wednesday, with investors focused on its spending on artificial intelligence (AI) and the strength of its advertising revenue after it rolled out new AI tools. The Facebook and Instagram parent is expected to report a 20% year-over-year gain in revenue to $38.37 billion, and earnings per share (EPS) of $4.71, up from $2.98. Analysts are forecasting a surge in Q2 ad revenue on an improved ad environment, the adoption of Instagram Reels, and new products for advertisers. Its shares are little changed in premarket trading. American depositary receipts (ADRs) of Arm Holdings (ARM) are surging 4% in premarket trading as it gears up to report fiscal 2025 first-quarter earnings after the bell, with investors likely watching for updates on its royalty revenue and reported AI chip development. The British chip designer is projected to report a 34% year-over-year growth in revenue to $909.3 million and EPS of 16 cents, up from 10 cents. Arm could also provide investors with insights about an AI chip it reportedly has in development. The company could be positioned to gain as big tech companies like Microsoft, Meta, Alphabet (GOOGL), and Amazon (AMZN) invest in AI, and build out data centers to run AI-related workloads. Shares of Dutch semiconductor-gear maker ASML Holding (ASML) are soaring 7% in premarket trading on a report that the U.S. is on track to exclude chip-equipment makers in the Netherlands, Japan, and South Korea from its latest set of trade curbs aimed at reining in China's tech advance. According to Reuters, shipments from allies that export key chipmaking equipment won't be included from an expansion of the Foreign Direct Product Rule next month by the Biden administration, thus limiting that new rule. The expansion will prevent around half a dozen Chinese fabs from getting exports from many countries, the report said. Places whose exports would be affected would include Israel, Taiwan, Singapore, and Malaysia. In Japan, Tokyo Electron shares closed up 7%. Meta's Magnificent 7 peer Microsoft (MSFT) is falling almost 3% in premarket trading after its cloud growth slowed and missed Wall Street forecasts even as overall quarterly results were a beat. The earnings-driven drop comes after Microsoft shares have slumped from their record close set on July 5, pressured by a broad selloff in technology stocks and a global IT outage earlier this month caused by an erroneous software update by cybersecurity firm CrowdStrike (CRWD) that triggered widespread disruptions. Microsoft Chief Executive Officer (CEO) Satya Nadella said capital expenditures -- a key focus of investors for tech earnings -- are being guided by "demand signals," including the growth in Azure AI, and that the company's spending would change if demand shifts.