Trade talks; Fed decision ahead; Meta, Microsoft to report - what’s moving markets

Investing.com - U.S. stock futures edge up ahead of a flurry of potentially market-moving events, including a Federal Reserve interest rate decision, economic data, and fresh earnings from major corporate players. The Fed is expected to keep interest rates steady, despite intensifying pressure from President Donald Trump to rapidly bring down borrowing costs. Meanwhile, results are due out from "Magnificent Seven" companies Meta Platforms (NASDAQ:META) and Microsoft (NASDAQ:MSFT), with investors likely to focus in on their respective artificial intelligence ambitions.

1. Futures tick up

U.S. stock futures pointed higher on Wednesday, as investors prepared for a pivotal wave of central bank decisions and major corporate earnings.

By 03:43 ET (07:43 GMT), the Dow futures contract were mostly unchanged, S&P 500 had gained 6 points, or 0.1%, and Nasdaq 100 futures had risen by 47 points, or 0.2%.

The main averages slipped on Tuesday, with the benchmark S&P 500 and tech-heavy Nasdaq Composite backing away from recent record highs.

Drugmaker Merck (NSE:PROR), health insurer UnitedHealth (NYSE:UNH) and jetmaker Boeing (NYSE:BA) were among some of the Dow components to fall after unveiling their latest quarterly results. United Parcel Service (NYSE:UPS) also tumbled by more than 10%. The package deliverer once again declined to lay out annual revenue and margin forecasts, exacerbating worries around the impact of often erratic U.S. trade policy on the group’s performance.

Meanwhile, Procter & Gamble (NYSE:PG) dropped on lower-than-anticipated annual guidance, while the consumer goods giant flagged that it will soon have to raise prices on some of its products to counterbalance the effect of tariffs. The levies also played a part in appliance maker Whirlpool’s (NYSE:WHR) move to slash its full-year outlook, sending shares down by over 13%.

2. No major breakthrough after U.S.-China trade talks

A fresh round of trade negotiations in Sweden between the U.S. and China failed to result in a major breakthrough following two days of talks.

But both sides described their discussions, which were aiming to help soothe possibly damaging tensions by seeking an extension to their ongoing 90-day trade truce, as constructive.

U.S. Treasury Secretary Scott Bessent seemed to indicate that the continuation would not be rejected, telling reporters after the meetings: "It’s just that we haven’t given the signoff." U.S. officials added that the move to extend the truce, which is due to expire on August 12, ultimately falls to President Trump. Should he decide not to pursue an extension, U.S. duties on China could snap back to triple-digit rates.

Trade talks have been a key focus of the Trump administration in recent days, most notably with the president notching a framework deal with the European Union on Sunday. On Tuesday, Trump said an agreement with India has yet to be finalized after Reuters reported that India is preparing to accept higher levies of 20% to 25% on its exports to the United States.

Still, pacts with a host of other countries have yet to be secured, and an August 1 deadline for Trump’s elevated "reciprocal" tariffs to come into effect is now mere days away.

3. Fed decision looms large

Much of the attention now turns to the Federal Reserve, which is widely tipped to leave interest rates unchanged at the conclusion of its latest two-day meeting on Wednesday.

Many Fed officials have recently indicated that a more cautious approach to future rate actions is warranted, citing a desire to see how Trump’s aggressive tariff policies impact the wider economy.

Fears have surrounded the possible implications of the levies, particularly their potential to drive up inflation and weigh on broader growth. Price gains have proven to be so far relatively tepid and activity has been resilient, although worries remain that business will be increasingly passing more costs on to consumers in the coming months.

Against this backdrop, the Fed has recently opted to keep borrowing costs steady at a range of 4.25% to 4.5%. This stance -- and Chair Jerome Powell’s public defense of it -- has drawn the ire of Trump, who has called on the Fed to quickly ratchet down rates to help boost growth.

4. Data incoming

More data is inbound this week that could provide further insight into the state of the American economy.

On Wednesday, traders will have the chance to parse through the first reading of second-quarter gross domestic product. Economists anticipate that the world’s biggest economy will return to growth of 2.5% during the April to June period, following a contraction of 0.5% in the first quarter.

A monthly reading of private payrolls is also tipped to rise by 77,000 in July after sliding by 33,000 in the previous month. The numbers from ADP will serve as a precursor to the all-important nonfarm payrolls reading due out on Friday.

Traders have also been digesting figures which showed an uptick in consumer confidence this month, but a measure of U.S. job openings and hiring decreased, suggesting some slowing in the labor market.

5. Microsoft, Meta earnings ahead

A busy earnings docket will be highlighted on Wednesday by this week’s first batch of results from key members of the so-called "Magnificent Seven" group of mega-cap tech stocks.

Software (ETR:SOWGn) titan Microsoft’s artificial intelligence plans will be under heavy scrutiny, particularly after partner OpenAI recently utilized cloud services offered by rivals like Google (NASDAQ:GOOGL), CoreWeave, and Oracle (NYSE:ORCL). ChatGPT-maker OpenAI has powered growth in Microsoft’s Azure cloud unit, helping the wider company become one of the major winners of a boom in enthusiasm around the applications of AI.

The nascent technology will likely be at the forefront of analysts’ minds as they also consider returns from Facebook-owner Meta Platforms. CEO Mark Zuckerberg has targeted massive spending on AI as a pillar of its future strategy, with the firm aiming to spend roughly $55 billion on building new AI data centers in the last three quarters of the 2025 calendar year. How Meta and Zuckerberg plan to monetize these investments remains a key focus for investors.

Microsoft and Meta’s earnings after the bell are slated to be accompanied by returns from other names, including chip designer Arm Holdings (NASDAQ:ARM) and trading platform Robinhood Markets (NASDAQ:HOOD).