The S&P 500 futures rose 1.1%, Nasdaq futures jumped 2%, and Dow Jones futures edged up 0.2%. Across the pond and over in Asia, markets were also feeling the love. The ADP Institute strengthened bets of a September Fed rate cut, reporting that the US private sector created only 122,000 jobs in July, missing the expected 160,000. This is down from June's 150,000 gain. The report also noted a slowdown in wage growth to 4.8% year-over-year, thanks to the Federal Reserve's inflation-fighting antics.

It's a whirlwind week, with AMD and Microsoft's results yesterday, the Bank of Japan's decision and the Fed's policy update today, and Apple and Amazon's earnings on Thursday. And let's not forget the grand finale: the monthly US employment figures on Friday. Microsoft didn't exactly set the world on fire with its earnings, while AMD had investors doing a happy dance. So, while the big tech platforms aren't giving anyone the warm fuzzies, the semiconductor sector might just be the comeback kid.

Meanwhile, the Bank of Japan confirmed it's slowly pulling the plug on its long-running monetary support plan. It raised rates by 15 basis points to 0.25% and plans to halve its bond repurchase program from 6,000 to 3,000 billion yen per month starting January 2026. The yen got a little pep in its step, and Japanese banking stocks had a field day. Why should Western investors care about Japanese monetary policy? Because it has a butterfly effect on global finance. The yen is central to the carry trade strategy, where investors borrow low-interest yen to buy higher-yielding assets. Japanese investors, the world's largest holders of US Treasuries, use yen to buy them. So, if Japanese yields rise and US yields fall, this strategy loses its shine. With huge sums of money at stake, the BOJ's actions are closely watched worldwide. And let's not forget, carry trades also impact emerging markets.

Yesterday, tech stocks took another beating. The Nasdaq fell 1.4%, signaling jitters ahead of Microsoft's earnings report. The Dow Jones and Russell 2000 stayed in the green, showing that investors have some faith in US monetary policy. The Fed's decision will be announced at 2:00 p.m. ET, and the market will hang on Jerome Powell's every word at 2:30 p.m. With a rate cut in September almost a given, investors will be looking for hints about future moves. A bias toward three rate cuts by 2024 would be a boon for discounted stocks and the Russell 2000. But remember, the devil is in the details when it comes to Powell's speeches.

Let's not forget four other market movers. First, it's corporate earnings season, and results are flying in fast and furious. Second, Kamala Harris is closing the gap on Donald Trump in key swing states, suggesting a tighter race than if Joe Biden were still in the running. Third, gold and oil prices are up due to geopolitical tensions, including protests in Venezuela and the death of Hamas leader Ismail Haniyeh in Iran. Finally, China's July PMIs were a mixed bag, with manufacturing still contracting and services barely expanding. Investors are skeptical of the politburo's promises of more policy support.

In Asia-Pacific this morning, it was a sea of green. Investors shrugged off Microsoft's figures and stayed optimistic about Fed policy. The Nikkei 225 gained 1.4% after the BOJ's decision. In China, mainland and Hong Kong indices rose 2% despite economic woes. Australia climbed 1.7%, buoyed by financial and mining stocks after a lower-than-expected core inflation figure in June, easing fears of an RBA rate hike. Europe’s indices are mostly in the green, with the Stoxx EU 600 up 0.8%.

Today’s economic highlights:

In the United States, the calendar includes the ADP employment change, Chicago PMI, pending home sales and DOE crude oil inventories, as well as the Fed's rate decision and Jerome Powell's presentation conference. In Europe, we have French CPI and PPI, job data in Germany and July inflation in the euro zone. The full agenda is here.

The dollar is worth EUR 0.9234 and GBP 0.77902. The ounce of gold is up to USD 2,418. Oil bounces back, with North Sea Brent at USD 80.40 a barrel and US light crude WTI at USD 77.32. The yield on 10-year US debt falls to 4.15%. Bitcoin is trading at USD 66,255.

In corporate news:

  • Boeing announced on Wednesday that it had widened its quarterly loss, particularly due to its ailing defense and space activities. The American manufacturer has already reduced its production of commercial aircraft following reports of quality defects. The group also said it had appointed Kelly Ortberg as its new president and CEO.
  • Microsoft reported lower-than-expected quarterly sales growth for its cloud computing division on Tuesday evening, adding to signs that the return on investment in artificial intelligence (AI) will take longer than expected. The stock is down 2.6% in pre-market trading.
  • Advanced Micro Devices (AMD raised its sales forecast for artificial intelligence (AI) chips by $500 million this year and stressed that supply would remain limited until 2025. The stock jumped 9.2% before the opening of trading in New York. Following in AMD's footsteps, Nvidia, Broadcom, Applied Materials, Marvell Technology, and Qualcomm gained between 2% and 5.2%.
  • Intel plans to cut thousands of jobs to reduce costs and cope with market share erosion, Bloomberg reported on Tuesday, citing sources close to the matter. The stock advanced 1.8% in pre-market trading.
  • Electronic Arts announced on Tuesday evening that it expected sales for its second fiscal quarter to exceed analysts' expectations, citing strong sales of titles such as “EA FC 24”.
  • Match - Tinder's parent company announced its intention to cut around 6% of its workforce as part of plans to discontinue live streaming services on its dating apps. Activist investors are pressuring the group to improve its results. Match shares climbed 10% in pre-market trading.
  • Pinterest announced that it expects sales for the current quarter to fall short of Wall Street expectations, as the image-sharing platform faces stiff competition in a stabilizing digital advertising market. The share price fell by around 12.5% in pre-market trading.
  • Mondelez International - Cadbury's parent company missed second-quarter sales forecasts, as high inflation prompted some customers to switch to cheaper products.
  • Kraft Heinz cut its full-year organic sales forecast, a sign that rising prices for its snacks and meal kits will continue to weigh on consumer demand.
  • Starbucks reported a quarterly profit in line with Wall Street expectations and confirmed its full-year forecasts, despite a decline in worldwide sales amid persistent weakness in consumer spending in the group's main markets. The coffee chain's shares, down 22% since the start of the year, are up 5% in pre-market trading.
  • Humana announced that it had beaten Wall Street expectations with second-quarter earnings, thanks to the strength of its Medicare Advantage insurance business.
  • DuPont de Nemours raised its full-year guidance, as strong demand for electronics and artificial intelligence-based technologies helped it post better-than-expected second-quarter results.
  • Altria missed second-quarter sales and earnings forecasts, as the tobacco giant faced persistent weakness in demand for its cigarette brands.
  • Marriott International lowered its room sales growth forecast for this year, as the US domestic travel sector continued to record mediocre results.
  • T-Mobile US climbs 3% in pre-market trading, as the telecom operator announced that it now expects to add between 5.4 million and 5.7 million subscribers this year, compared with a previous forecast of 5.2 million to 5.6 million.
  • Skyworks Solutions reported a fall in third-quarter sales, penalized by weak demand for chips used in the automotive sector. The share price lost almost 5% in pre-market trading.

Analyst recommendations:

  • Albemarle Corporation: Berenberg downgrades to hold from buy with a price target reduced from USD 160 to USD 83.
  • Charter Communications, Inc.: Wolfe Research downgrades to peerperform from outperform.
  • Corning Incorporated: Deutsche Bank upgrades to buy from hold with a target price of USD 46.
  • Edwards Lifesciences Corporation: Daiwa Securities downgrades to outperform from neutral with a price target reduced from USD 87 to USD 72.
  • Paypal Holdings, Inc.: Bernstein upgrades to outperform from market perform with a price target raised from USD 71 to USD 78.
  • Penumbra, Inc.: Citi downgrades to neutral from buy with a price target reduced from USD 265 to USD 178.
  • Woodward, Inc.: Deutsche Bank downgrades to hold from buy with a target price reduced from USD 197 to USD 158.
  • American Electric Power Company, Inc.: Mizuho Securities maintains a neutral recommendation with a price target raised from 83 to USD 100.
  • Crowdstrike Holdings, Inc.: Jefferies maintains its buy recommendation and reduces the target price from USD 400 to USD 300.
  • Five9, Inc.: Mizuho Securities maintains its outperform recommendation and reduces the target price from USD 100 to USD 65.
  • Howmet Aerospace Inc.: JP Morgan maintains its overweight recommendation and raises the target price from 83 to USD 105.
  • Ipg Photonics Corporation: Raymond James maintains its strong buy recommendation and reduces the target price from USD 127 to USD 100.
  • Lululemon Athletica Inc.: Baird maintains its outperform rating and reduces the target price from USD 470 to USD 350.
  • Rtx Corporation: Melius Research LLC maintains its hold recommendation with a price target raised from USD 103 to USD 125.
  • Skyworks Solutions, Inc.: TD Cowen maintains its hold recommendation with a price target raised from 90 to USD 110.
  • Stanley Black & Decker, Inc.: Wells Fargo maintains its equalweight recommendation and raises the target price from USD 85 to USD 110.
  • Symbotic Inc.: Goldman Sachs maintains a neutral recommendation and reduces the target price from 40 to USD 30.
  • Ufp Industries, Inc.: Stifel maintains its buy recommendation and raises the target price from USD 125 to USD 157.
  • Williams-Sonoma, Inc.: BNP Paribas Exane maintains a neutral recommendation with a price target reduced from USD 302 to USD 154.
  • Londonmetric Property Plc: Citi upgrades to buy from neutral with a price target raised from GBP 1.59 to GBP 2.51.
  • Spectris Plc: JP Morgan upgrades to neutral from underweight with a target price raised from GBP 27.50 to GBP 29.50.