Dow Jones, S&P 500, Nasdaq likely to retreat ahead of key earnings and GDP reading

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6.30am: Microsoft quarterly results in focus 

Wall Street is set for a lower opening as traders mark time ahead of quarterly results after the close today from Microsoft and fourth quarter GDP and Personal Consumption Expenditures data later in the week that will help to inform the Federal Reserve’s next move on interest rates.  

Futures for the Dow Jones Industrial Average (DJIA) fell 0.3% in Tuesday pre-market trading, while those for the broader S&P 500 index also retreated 0.3%, and contracts for the Nasdaq-100 declined 0.5%.

The Nasdaq led US stocks higher on Monday as the markets started a busy week of earnings and economic data on the front foot. At the close, the DJIA was up 0.8% at 33,630 points, the S&P 500 added 1.2% to reach 4,020, and the Nasdaq gained the most to close at 11,364 points.

“Wall Street kicked off the week sharply higher on Monday with the risk-on tech-heavy Nasdaq leading the charge to log a gain of more than 2%,” Victoria Scholar, head of investment at interactive investor commented.

“Focus this week is on US GDP figures which are out on Thursday for clues into the strength of the US economy,” she added. “Microsoft gets set to deliver earnings after the bell having added to the chorus of job cuts facing Big Tech just last week, providing a boost to the sector. Netflix set the bar high last week with its earnings release, sharply outpacing expectations in terms of its subscriber numbers.”

Ahead of Microsoft’s results, General Electric (NYSE:GE) and Johnson & Johnson (NYSE:JNJ) will report their December quarter earnings early Tuesday. Tesla and Boeing report on Wednesday, in a week that sees an estimated quarter of the S&P 500 reporting.  

“The US data slate is also dominated by PMI data due later today,” noted TickMill Group’s market analyst Patrick Munnelly. “With both readings believed to remain in contractionary territory, key for US investors will be whether next week’s ISM data confirms the PMI prints as the ISM releases tend to be tracked more closely by US investors.”