Apple earnings, FOMC meeting — What to know in markets Tuesday

Heidi Chung

There are two key events that investors will be paying close attention to on Tuesday, the start of the Federal Open Market Committee’s (FOMC) meeting and tech giant Apple’s earnings report.

The FOMC’s two-day policy meeting kicks off on Tuesday and will arguably be the biggest event of the week with market-moving potential. At the meeting’s conclusion on Wednesday, the FOMC is expected to cut rates for the first time in over a decade, despite recent data pointing to a strong economy.

“Our U.S. economists believe the committee has clearly signaled its intent to cut by 25 bp and see little support for a 50 bp cut. Markets are currently discounting 65 bp of easing by the end of 2019 and an additional 35 bp of easing by year-end 2020,” Goldman Sachs wrote in a note Friday. “However, our U.S. economists do not believe that the current pace of growth and inflation warrant the degree of easing currently priced by markets.”

Prior to the better-than-expected GDP data released Friday, Fed fund futures were predicting a more than 80% chance of a 25 basis point rate cut. As of Monday, the futures are now predicting a 73% chance of a 25 basis point cut this week.

Meanwhile, iPhone maker Apple will take center stage after the market close when it reports fiscal third-quarter earnings. Slowing iPhone demand and weak sales in China have put pressure on the tech giant, as it tries to move away from dependence on hardware sales. Last quarter, iPhone sales fell 17% from the same period last year, and iPhone sales in China, a key market, fell 22% year over year.

Apple has been caught in the crosshairs of the U.S.-China trade war, and with no resolution to the feud in sight, investors have grown concerned about Apple’s future.

Analysts polled by Bloomberg expect Apple to report earnings of $2.10 per share on $53.36 billion in revenue. iPhone sales are expected to fall 10%; however, sales in other segments such as iPad, Mac, Services and Wearables are expected to jump a combined 14.4%, according to data compiled by Bloomberg.

Other notable earnings reports scheduled for Tuesday include Altria (MO), ConocoPhillips (COP), D.R. Horton (DHI), Eli Lilly (LLY), Grubhub (GRUB), Incyte (INCY), Mastercard (MA), Merck (MRK), Pfizer (PFE), Procter & Gamble (PG), Ralph Lauren (RL), Under Armour (UAA) before market open. Advanced Micro Devices (AMD), Amgen (AMGN), Electronic Arts (EA), Gilead (GILD), Mondelez (MDLZ) will report after the market close.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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