U.S. stocks little changed ahead of big tech companies’ earnings reports

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Big Tech Revenues
The S&P 500 and Nasdaq Composite Index rose modestly on Monday as investors awaited the U.S. central bank’s policy announcement on Wednesday ahead of a packed week of earnings reports from major technology companies. The S&P 500 rose 0.08% and the Nasdaq Composite added 0.07%. The Dow Jones Industrial Average lost 0.12%. Treasury yields fell and U.S. crude oil prices slid amid rising tensions between Israel and Lebanon’s Iran-backed militia Hezbollah.

McDonald’s mistake
McDonald’s quarterly profit and sales fell short of analysts’ expectations, and same-store sales fell globally for the first time since 2020. The fast-food giant’s second-quarter net profit fell to $2.02 billion from $2.31 billion a year earlier, while sales were roughly flat at $6.49 billion. The company said it strives to create value for customers who find prices too high and that its recently launched $5 value meal promotion in the U.S. is bringing lower-income customers back to its stores. McDonald’s shares closed up 3.74%.

Apple AI
Apple has released the first version of Apple Intelligence to registered developers, but the highly anticipated AI software may not be coming to the next iPhone. The new software is in the developer beta of iOS 18.1, but iPhones released this fall will run on iOS 18. The release of Apple Intelligence is expected to trigger a wave of phone upgrades, as the system only works on high-end iPhone models such as the iPhone 15 Pro and iPhone 15 Pro Max.

Bitcoin retreats
Bitcoin fell more than 1% on Monday as investors digested remarks from Republican presidential candidate Donald Trump at the Bitcoin Conference over the weekend. The cryptocurrency traded at $67,264 after briefly rising to $69,982, according to Coin Metrics. Trump said he would replace Securities and Exchange Commission Chairman Gary Gensler “on his first day in office,” saying the agency had hurt the industry by failing to put in place proper rules and regulations.

[PRO] Ensuring higher yields
Janus Henderson says investors who have their savings in money market funds should switch to bond ETFs to lock in the current high yields, given signs the Fed will start cutting interest rates later this year. Bond prices and yields are inversely proportional to each other, so bond investors benefit from higher prices in a falling interest rate environment.

McDonald’s shares rose despite missing Wall Street expectations, but the fast-food giant is an exception.

Companies that suffered disappointing quarterly results have been hit harder than usual this earnings season, according to financial information provider FactSet.

Companies that missed second-quarter profit expectations saw their stock prices fall an average of 3.8% in the five days starting two days before the earnings release, compared with a five-year average decline of 2.3% for companies that disappointed Wall Street expectations over the same period.

Shares of stocks that beat market expectations rose just 0.3% over the same period, compared with an average increase of 1% over the five-year period.

The phenomenon underscores high expectations heading into the season and concerns about an overheated stock market following a strong rally so far this year.

Signs of weakening consumer demand are also coming from the auto industry, with analysts warning of tough times ahead for Detroit’s Big Three, with shares of Ford, GM and Stellantis coming under pressure after reporting second-quarter earnings.

Analysts said the U.S. market, a profit driver for most automakers, was normalizing after years of record high prices, low vehicle inventories and solid demand. Inventories, especially at Detroit automakers, are rising while vehicle prices are gradually falling.

— CNBC’s Yun Lee and Michael Weiland contributed to this report.