US Stocks, Treasuries Rise as Oil Slumps Ahead of Fed, Earnings Rush

Brent falls below $91 a barrel

Market prices 66% chance of Fed hold this week

US stocks and Treasuries rose on July 27 as oil prices tumbled on signs a pause in hostilities between the US and Iran may hold. Investors are also heading into a week packed with earnings from major companies and the Federal Reserve’s rate decision.

As of 10 a.m. in New York, the S&P 500 was up 0.5%, the Nasdaq Composite had gained 0.5% and the Dow Jones Industrial Average had climbed 0.9%.

September Brent crude, the global benchmark, fell 6.2% to $90.79 a barrel after rising as high as $100 last week. West Texas Intermediate futures dropped 5.7% to $83.83 a barrel. The selloff accelerated after news that the US had halted attacks on Iran and Kazakhstan’s oil export terminal had resumed shipments, easing supply pressure.

The yield on the 10-year Treasury note, which briefly topped 4.7% last week, fell 3 basis points to 4.650%. The two-year Treasury yield, which is more sensitive to Fed policy, was little changed at 4.32% ahead of the central bank’s meeting.

Nvidia fell 2%, while Micron Technology and SK Hynix also edged lower. Intel and Advanced Micro Devices declined. Alphabet rose 2%.

A total of 170 companies are due to report quarterly results this week, including major technology firms such as Amazon, Apple, Meta Platforms and Microsoft.

CNBC said that if spending on artificial intelligence increases more than expected, investor concerns could intensify and weigh on those stocks, as happened with Alphabet last week. At the same time, continued AI spending would be a positive for semiconductor and equipment makers because it would signal demand tied to that investment remains intact.

Ken Mahoney, chief executive officer of Mahoney Asset Management, said continued spending is a risk for hyperscalers. If they cut spending or slow the pace of increases, however, the market reaction could be even stronger.

The Fed is due to announce its rate decision and economic projections on July 29. Experts expect the central bank to leave rates unchanged this month and raise them in September. The CME Group’s FedWatch tool showed markets pricing in a 66% chance the Fed leaves its benchmark rate unchanged this week and a 33% chance of a quarter-point increase. That compares with nearly an 80% chance of a hold two weeks earlier, before the US and Iran resumed airstrikes.

The S&P 500 and Nasdaq fell 0.6% and 2.1%, respectively, last week, extending their losing streaks to two straight weeks. The Dow dropped 0.4%, marking a third consecutive weekly decline.

Kim Jung-a, contributing reporter