S&P 500, Nasdaq set for bigger open

The S&P 500 and the Nasdaq were set to open slightly higher on Tuesday as investors got ready for earnings reports from Microsoft and Alphabet. At the same time, they are awaiting signs from the Federal Reserve on its monetary policy stance. Besides, Apple Inc, Facebook Inc, and Amazon.com Inc’s shares were also higher. The five companies combined account for around 40% of the S&P 500’s market capitalization.

According to Kim Forrest, a chief investment officer at Bokeh Capital Partners, the market is looking forward to guidance about where it is going in the next six months to a year. 

According to Refinitiv IBES data, overall earnings for S&P 500 companies are expected to jump 34.3%. 

Tesla’s shares sank

Electric-car maker Tesla Inc sank about 3% in premarket trading after it beat analysts’ expectations for quarterly revenue. However, a jump in environmental credit sales to other automakers and liquidating some bitcoins helped the company.

According to Forrest, Tesla is a special case. A lot of company gains were driven by its bitcoin bet. Tesla did sell many cars, but it didn’t make a lot of money from the cars. 

On Monday, the S&P and the Nasdaq settled at record levels. Nasdaq completed a full recovery from its 11% correction it experienced at the beginning of February. Data about the US economic rebound, vaccine distributions, and monetary support has provided much support.

Analysts answer: Will the Fed curb stimulus in 2021?

The Federal Reserve two-day monetary policy meeting begins on Tuesday. Despite the greater optimism and the strength of recent economic data, the main investment agencies estimate that the president of the United States central bank will continue to cling to the need to buy a little more time to achieve new substantial advances.

According to Matthew Hornbach, strategist at Morgan Stanley, the markets will be surprised by the sustained patience of the Fed. He clarifies that for the summer, it will have enough evidence of a strong recovery to suggest that downsizing purchases of Treasuries and mortgage-backed assets could be on the horizon.

Axa Investment Managers also expects no changes in monetary policy. The global investment management firm isn’t expecting a drastic change in the Fed’s policies in the coming months. 

Mohamed el-Erian, the economic advisor to Allianz, stated that instead of following Bank of Canada’s footsteps, the Fed will follow those of the European Central Bank.