Top 5 Things to Know in the Market on Tuesday

Here are the top five things you need to know in financial markets on Tuesday, July 26:

1. Seven Dow Components Set to Release Earnings
Investors are looking forward to a busy day as seven companies from the Dow Jones Industrial Average are set to announce their earnings. 3M Company, Caterpillar Inc., DuPont, McDonald’s Corporation, United Technologies Corporation, and Verizon Communications Inc. will report their results before the market opens, while a notable tech company will release its earnings after the market closes. As of Monday, 69% of the companies that have already reported exceeded earnings estimates, and the anticipated decline in quarterly earnings for the second quarter among S&P 500 firms is projected to be just 3%, better than the previously forecasted 4.7% drop.

2. Federal Reserve’s Two-Day Meeting Begins
The Federal Reserve kicks off a two-day policy meeting, with a key decision expected on Wednesday. Market participants will be closely watching for indications on interest rate hikes amid ongoing discussions about the implications of Britain’s exit from the European Union. Recent positive economic data has fueled speculation regarding potential rate increases, with interest rate futures currently reflecting a 19% probability of a hike by September. The probability of a hike has risen sharply over the past week.

3. Yen Surges as Japanese Stimulus Plans Fall Short
The Japanese yen experienced a surge of over 1% amid expectations that the forthcoming stimulus package from the government may underwhelm market participants. Reports indicated that the government is planning a stimulus, but many investors were anticipating a much larger fiscal injection of between 10 trillion to 20 trillion yen. Additionally, market players are bracing for the Bank of Japan’s meeting later in the week, where further policy easing, including deeper negative interest rates and increased asset purchases, is widely expected.

4. Pound Struggles Amid Stimulus Expectations
The British pound faced downward pressure, dropping to a session low of 1.3061 earlier in the day as expectations mount for a potential rate cut from the Bank of England at its upcoming meeting in early August. Reports indicated comments from a member of the Bank’s rate-setting committee that added to these expectations.

5. West Texas Intermediate Crude Drops
West Texas Intermediate (WTI) crude oil prices fell for the first time since April, reflecting ongoing concerns regarding a global oversupply of crude and refined products. Prices dropped by 0.74%, reaching $42.81, while other crude benchmarks also experienced declines.