Day Ahead: 3 Things to Watch for July 28

By Liz Moyer

Investing.com -- Big tech bounced back on Monday, lifting other sectors as the world awaits the Federal Reserve's next decision on interest rates and word from Capitol Hill on negotiations over a new round of stimulus.

Chip makers were also in the news after Intel Corporation (NASDAQ:INTC) stoked concerns about production of its next-generation chip, pushing its shares down another 2% on Monday after a sell-off last week. Shares of Taiwan Semiconductor Manufacturing (NYSE:TSM) rose more than 11%.

The week will feature a deluge of earnings reports from across the S&P 500, including Tuesday announcements from Harley-Davidson Inc (NYSE:HOG), JetBlue Airways Corp (NASDAQ:JBLU), McDonald’s Corporation (NYSE:MCD) and Pfizer Inc (NYSE:PFE), among others.

Here are three things that could affect markets tomorrow:

Gold at a record high

Gold Futures reached a new record high on Monday even as stocks continue to gain, an apparent contradiction between the part of the market signaling risk off, and the part signaling risk on.

Investors flock to gold as a store of value when the economy looks uncertain. The new record, at $1,931 an ounce on Comex, is the highest since September 2011, and some analysts believe there is still room to rise above $2,000 an ounce before long.

Gold's rally in recent weeks has come on top of trillions of dollars of government stimulus and an ever-weakening dollar. The US Dollar Index Futures, which measures the dollar against a basket of six other currencies, touched a 17-year high in March at 103.96 and is below 94 most recently. That is the lowest in almost two years.

New stimulus hope as Fed meets

Republicans were set to unveil their own proposals for another round of economic stimulus as the U.S. struggled to get a grip on the coronavirus.

Treasury Secretary Steven Mnuchin said over the weekend that the package would include $1 trillion of relief. That is expected to include another round of $1,200 checks to individual taxpayers who earn below a certain income. It is also expected to include an extension of emergency unemployment checks, though at a lower amount than the current $600 a week pandemic unemployment assistance. 

On Tuesday, the Federal Open Market Committee begins the latest of its regular two-day meetings. The expectation is for the central bank to maintain rates near zero as it did in its last meeting, held just as the economy started to reopen after Covid-induced business shutdowns. The Fed's main task this week is to examine its commitment to zero rates and to an ongoing asset purchase program as it tries to jump-start the economy.

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FANG earnings: All bark and no bite? 

FANG stocks pushed the market higher on Monday after selling off last week for the first time in two months. This is a big week for the tech giants, with Facebook Inc (NASDAQ:FB), Amazon.com Inc (NASDAQ:AMZN), Apple Inc (NASDAQ:AAPL) and Google's Alphabet (NASDAQ:GOOGL) Inc Class C (NASDAQ:GOOG) set to report earnings, along with a slew of other companies.

Analysts will likely be listening to what executives say about the outlook for the second half of the year. But the tech sector rally this year has gone against fears that Covid-related shutdowns would wreak damage on company earnings. Still, investors have begun to worry that the frothiness in the tech sector is pointing to another bubble that could burst at a moment's notice.