U.S. stock futures edged higher as investors evaluate soft employment figures, trade declarations, and the forecast for Federal Reserve borrowing costs. Robust profits provide markets a degree of protection against indications of U.S. economic slowing and ambiguity over the effect of Washington’s tariff plan. Concurrently, a write-down on its holding in Kraft-Heinz impacted earnings at Warren Buffett’s Berkshire Hathaway (NYSE:BRKa).
Futures higher
U.S. stock futures indicated gains on Monday after a steep decline at the close of the previous week, as the possibility of reduced borrowing costs helped to soothe concerns about the U.S. economy.
By 03:00 ET (07:00 GMT), the Dow futures contract had advanced by 128 points, or 0.3%, S&P 500 futures had gained 24 points, or 0.4%, and Nasdaq 100 futures had grown by 102 points, or 0.4%.
The primary averages on Wall Street dropped on Friday, with the benchmark S&P 500 specifically falling to its weakest day in over two months. Pressuring sentiment was President Donald Trump’s declaration of increased tariffs on a variety of trading partners, along with a weak employment report that included significant downward revisions that indicated a more profound slowdown in the American labor market than first expected.
Trump contributed to the selling pressure after he fired the chief of the statistics agency tasked with assembling the employment data, claiming — without proof — that the figures were “fixed.” Analysts noted that the dismissal raises questions about the long-term dependability of U.S. economic data, with some mentioning fears that Trump’s successor may be more eager to satisfy the White House than supply meticulous numbers.
Markets responded to the July employment survey by increasing their expectations for a Federal Reserve interest rate reduction as early as September, though media reports indicated that many Fed policymakers are not yet moving their position in a very dovish direction, opting instead to await additional data to be published.
Earnings ahead
Also lending support to stocks has been a generally strong corporate earnings season, which has helped to highlight the staying power of a multi-year boom in excitement around the applications of artificial intelligence.
Prominent tech companies like Facebook-owner Meta Platforms (NASDAQ:META) and software firm Microsoft (NASDAQ:MSFT) have presented stellar results in recent days and, perhaps more importantly, supported their strategies for huge capital expenditures on AI.
These declarations have eased some remaining concerns over the effect of Trump’s tariffs, although a number of firms have started to suggest that price increases could be forthcoming in the months ahead.
Still, with over half of the corporations in the S&P 500 having announced, year-on-year earnings growth for the second quarter is projected at 9.8%, compared with a forecast uptick of 5.8% on July 1, according to LSEG data cited by Reuters. More than 80% of the companies that have announced have exceeded analysts’ profit forecasts, compared to an average of 76% in the last four quarters.
This week, markets will be watching earnings from the likes of economic indicator Caterpillar (NYSE:CAT), burger giant McDonald’s (NYSE:MCD), and media conglomerate Disney (NYSE:DIS). All of these corporations are major members of the blue-chip Dow, which is now lingering just under its record high reached in December.
Berkshire Hathaway results
Berkshire Hathaway has recorded a $3.76 billion write-down on its holding in consumer food company Kraft Heinz (NASDAQ:KHC), while a drop in insurance underwriting premiums also weakened second-quarter returns from Warren Buffett’s vast conglomerate.
Along with modest gains from common stocks such as American Express (NYSE:AXP) and Apple (NASDAQ:AAPL), the Kraft-Heinz write-down and premiums drop led to a sharp fall in total net profit to $12.37 billion from $30.35 billion in the equivalent period last year. Revenue also decreased by 1.2% to $92.5 billion.
Still, Berkshire was lifted by a nearly 20% surge in operating income at its BNSF unit that originated primarily from expense reductions and cheaper fuel costs.
Berkshire’s cash reserve at the end of the second quarter was $344 billion, down marginally from $348 billion in the prior quarter but close to an all-time peak.
The earnings arrive as Berkshire anticipates the forthcoming departure of the 94-year-old Buffett. He will retire at the end of 2025 from his long-held position at the head of a company that has made him a well-known figure in financial markets, with current Vice Chair Greg Abel slated to take his place.
Crude steady despite OPEC+ production hike
Oil prices stabilized Monday, even after a group of leading producers consented to another significant production increase in September, contributing to global supply.
At 03:10 ET, Brent futures dipped 0.2% to $69.80 a barrel, and U.S. West Texas Intermediate crude futures gained 0.3% to $67.53 a barrel.
The Organization of the Petroleum Exporting Countries and their allies, referred to as OPEC+, consented on Sunday to increase oil output by 547,000 barrels per day for September.
The decision, consistent with market forecasts, signifies a complete and premature reversal of OPEC+’s largest portion of production cuts, totaling about 2.5 million bpd, or about 2.4% of global demand.
Spot gold price dips
Gold prices were varied in early European trading on Monday, as investors took some profits after a gain in the previous session driven by expectations for Fed interest rate cuts.
Spot gold had dropped 0.2% to $3,355.69 an ounce, whereas gold futures for December advanced 0.3% to $3,408.67/oz by 03:34 ET.
Gold prices surged over 2% on Friday, after the weak jobs data ignited hopes for a Fed rate reduction in September. The surge in the yellow metal, which typically performs well in a reduced-rate environment, assisted in pushing it to a weekly gain following two consecutive weeks of losses.
Elsewhere, Bitcoin advanced by 0.8% to $114,567.60, stabilizing after dipping by approximately 3% over the last five days.
