Megacaps buoy Wall St ahead of Big Tech earnings; UPS plummets By Reuters

By Ankika Biswas and Hong Kong Stock Exchange RMB dual counter transactionsLisa Pauline Mattackal

(Reuters) -Wall Street's main indexes rose on a boost from megacaps ahead of Alphabet (NASDAQ:) and Tesla (NASDAQ:) earnings on Tuesday, as investors assessed if the recent rally had fuel enough to sustain the charge, while Service (NYSE:) hit a nearly four-year low on weak results.

Apple (NASDAQ:), Microsoft (NASDAQ:), Meta Platforms (NASDAQ:) and Amazon.com (NASDAQ:) rose between 1% and 3.3%.

Tesla and Alphabet are set to kick off results from the so-called Magnificent Seven stocks after markets close. While the Google parent's shares were up 0.7%, the EV maker's dropped 1%.

The Information Technology and Consumer Discretionary indexes were the top sectoral gainers.

Earnings from technology giants will be key in determining if 2024's record rally can be sustained, or if U.S. stocks are overvalued. The question of whether a rotation away from megacaps in favor of underperforming sectors will continue is also on investors' minds.

The small-cap was up 1% on the day.

"You're looking at a scenario where (Big Tech) names are going to determine the direction of the market... So, if those names disappoint in any way whatsoever, markets will struggle," said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.

"Their valuations are expensive and we could run into a problem if they don't meet expectations."

Meanwhile, United Parcel Service, seen as a bellwether for the global economy, slumped 13.2% after missing earnings estimates on subdued package delivery demand and higher labor-contract costs, pulling the Dow Jones Transport Average index down by 1.2%.

(NASDAQ:) slumped 9.1% after forecasting third-quarter revenue below estimates, dragging the lower nearly 1%.

Among others, Spotify (NYSE:) jumped 12.2% after posting a record quarterly profit slightly ahead of expectations, while General Motors (NYSE:) dropped 6.8% despite a second-quarter results beat and a higher annual profit forecast.

Coca-Cola (NYSE:) rose 1% after it increased its annual sales and profit forecasts, while Comcast (NASDAQ:) lost 4.3% after missing revenue estimates.

Of the 74 S&P 500 companies that have reported quarterly results during this earnings season, 81.1% have beaten expectations, according to LSEG data available on Monday.

At 11:48 a.m. ET, the was up 92.76 points, or 0.23%, at 40,508.20, the S&P 500 was up 17.78 points, or 0.32%, at 5,582.19, and the was up 99.34 points, or 0.55%, at 18,106.91.

Economic data due to release this week includes the Personal Consumption Expenditures Price Index, the Fed's preferred inflation gauge, which will be crucial in gauging the monetary policy outlook against a backdrop of the recent inflation downtrend and signs the labor market is easing.

Bets of a 25-basis-point interest-rate cut by September have shot up to nearly 94%, from nearly 60% last month, according to CME's FedWatch Tool.

A Reuters poll showed the Fed is expected to cut rates twice this year, in September and December. The central bank's policymakers have said that resilient consumer demand warrants a cautious approach, despite easing inflation.

Advancing issues outnumbered decliners by a 1.27-to-1 ratio on the NYSE, and by a 1.51-to-1 ratio on the Nasdaq.

The S&P index recorded 40 new 52-week highs and one new low, while the Nasdaq recorded 178 new highs and 61 new lows.

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