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Market Mind: Will earnings save the day?

Tommy Wilkes looks at the markets for the day ahead.

The earnings season for European companies gets going on Tuesday, and so far it looks like rising costs and slowing demand are starting to hurt.

A few weeks ago, the biggest worry among traders was that the rewriting of high earnings expectations would cause the stock market to drop again.

Even though this hasn’t happened yet because some businesses have done better than expected, the signs on Tuesday point to being careful.

UBS reported a smaller-than-expected increase in second-quarter net profit, while Logitech (NASDAQ:LOGI) International reported a 38 percent drop in adjusted first-quarter profit and lowered its outlook for the full year 2023.

Goldman Sachs (NYSE:GS) says that about 34% of European companies that reported results for the second quarter fell short of expectations by at least 5%. This is the highest number of companies that missed expectations since the sovereign debt crisis in 2010.

Investors were waiting for updates from a lot of European companies this week, as well as from some of the biggest tech companies in the U.S., like Microsoft (NASDAQ:MSFT) on Tuesday.

Both European and American stocks looked like they were going to fall by a small amount, while the dollar stayed steady near highs not seen in 20 years.

The start of a two-day meeting of the Federal Reserve, which will end on Wednesday, is also keeping traders away, as policymakers are expected to raise interest rates by 75 basis points. The direction of interest rates will be the main focus of the market.

Tuesday should see a number of important events that should give the markets more direction:

The U.S. Federal Reserve’s two-day meeting starts today.

May home prices in the U.S.

U.S. June new home sales data

The auction of U.S. 5-year Treasury bonds

The July Non-Manufacturing Business Outlook Survey is put out by the Federal Reserve Bank of Philadelphia.

Nigerian and Hungarian central bank meetings

UBS, Lindt, ITV (LON:ITV), Unilever (NYSE:UL), Michelin (EPA:MICP), Deutsche Boerse (ETR:DB1Gn), Vivendi (OTC:VIVHY), LVMH, Easyjet, Unicredit (BIT:CRDI)

United Parcel Service Inc, General Electric (NYSE:GE), 3M Company (NYSE:MMM), Xerox Corp (NASDAQ:XRX), Coca-Cola (NYSE:KO), McDonald’s (NYSE:MCD), GM, Microsoft, Google (NASDAQ:GOOGL), and Boston Properties all made money in the U.S. (NYSE:BXP).

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