S&P 500 advances ahead of major tech companies’ earnings release later this week: Live updates

On Semiconductor climbed nearly 13% Monday after reporting higher earnings and revenue than previously reported.

The chipmaker’s second-quarter adjusted earnings per share came in at 96 cents, beating the 92 cents expected by analysts surveyed by FactSet. Revenue came in at $1.74 billion, compared with a consensus estimate of $1.73 billion. However, both adjusted earnings per share and revenue were down from the second quarter of 2023.

The company expects third-quarter earnings per share of 91 cents to $1.03, while it anticipates third-quarter revenue of $1.70 billion to $1.80 billion.

“We remain committed to driving growth through market share gains, doubling investments in strategic markets and expanding the breadth of our industry-leading product portfolio with analog and mixed-signal solutions,” CEO Hassane El-Khoury said in the earnings press release.

“As reflected in our recent supply agreement with the Volkswagen Group, we also continue to strengthen our leading position in automotive silicon carbide by increasing production with leading global OEMs in Europe, North America and China,” he added.

—Michelle Fox

Customers have been holding off on higher menu prices as McDonald’s results disappointed across the board in the latest quarter. Same-store sales declined in every region, leading to a 1% decline companywide, compared with Wall Street’s expectations for a 0.4% increase. It was the first decline in same-store sales since the fourth quarter of 2020.

Revenue was flat in the latest quarter, but missed Wall Street expectations by the most since October 2014 ($6.49 billion vs. $6.61 billion estimate).

That led the fast-food giant to post a second straight earnings shortfall, with adjusted earnings per share of $2.97 versus an estimate of $3.07, its biggest earnings shortfall since January 2022. Profit fell 6% in the latest quarter, the biggest year-over-year decline since the fourth quarter of 2020.

Despite all this bad news, McDonald’s stock is up, likely because these poor results came before the company began offering its new $5 menu. That initiative began in late June, just days before the end of its last quarter. McDonald’s is counting on that value proposition to lure customers back into its restaurants in a highly competitive fast-food retail environment.

Recent trading in small-cap stocks may not be slowing down yet.

The iShares Russell 2000 ETF (IWM) gained nearly 0.9% in premarket trading, indicating that the broader market rotation into small-cap stocks may continue this week. The small-cap Russell 2000 index ended last week up 3.5% and is up 12% over the past month.

This rotation is being driven by expectations that central banks will soon cut interest rates, which should then boost small caps and other cyclical sectors of the market, which tend to have higher funding costs.

— Pia Singh

The S&P 500’s decline from its all-time high on July 16 may not be over, according to market history collected by Sam Stovall.

The S&P 500’s decline from its peak to its trough last week totaled 4.7%, according to CFRA’s chief investment strategist. Since 1990, 68% of all declines of 4.5% or more have turned into pullbacks within “a matter of weeks,” Stovall wrote in a note Monday. The strategist defines a pullback as a decline of 5% to 9.9%.

Oppenheimer strategist John Stoltzfus noted that after last week’s volatile market action, the prospects for a broadening of the mega-cap tech rally are becoming more plausible.

The S&P 500 and Nasdaq Composite fell last week, while the Russell 2000 and Dow Jones Industrial Average posted gains.

“It’s not so much that investors are abandoning the Magnificent Seven stocks and the dominance of market performance by the biggest tech names, but rather that the broadening appears to us to be a realistic perception among market participants that the next leg higher requires a broader, less concentrated approach for stocks to advance as the Fed moves closer to cutting its benchmark rate,” Stoltzfus said in a note.

—Fred Imbert

The Federal Reserve’s Federal Open Market Committee meets Tuesday and Wednesday, but the market is not expecting a rate cut this week.

Traders in the federal funds futures market estimate a roughly 96% chance that the central bank will keep rates unchanged for this meeting, according to the CME Fed Watch tool.

However, traders overwhelmingly expect a cut at the September meeting.

— Jesse Pound

Stock futures were quiet at 6 p.m. in New York, with Dow Jones futures gaining about 50 points.

— Jesse Pound