July’s biggest economic event has come and gone.
For the balance of the month, investors will focus most of their attention on the corporate earnings calendar.
Netflix ( NFLX ) will be the first Big Tech company to report quarterly earnings during the current reporting period, with the streaming giant set to release results after the close on Thursday.
And with AI trading continuing to dominate Wall Street, investors will be paying close attention to results from ASML ( ASML ) and Taiwan Semiconductor Manufacturing Company ( TSM ), set for release on Wednesday and Thursday, respectively.
ASML is a leading manufacturer of lithography machines, which enable companies to etch their designs onto new chips. TSMC is the largest chip maker in the world.
Elsewhere on the earnings calendar, reports from Goldman Sachs (GS), Morgan Stanley (MS) and Bank of America (BAC) will round out results from Wall Street’s biggest banks, while Dow members Johnson & Johnson (JNJ) , American Express ( AXP ), UnitedHealth ( UNH ) and Travelers ( TRV ) are all expected to report.
Politics will also be a key concern for investors after Donald Trump survived an assassination attempt at a rally in Pennsylvania on Saturday. Business leaders were quick to react to the day’s events, condemning political violence and praising the former president’s “courage under fire. [Saturday night].”
The Republican National Convention will be held this week in Milwaukee, which will see Trump officially named the Republican nominee for president.
The economic data calendar will be sparse, with Tuesday’s retail sales report for June serving as the highlight. After May’s results showed an unexpected slowdown in spending, investors and Fed watchers will monitor the results for signs of further weakness in the US consumer.
The Oxford Economics team expects retail sales to fall 0.4% in June, although this overall decline will be driven by falling gas prices. “We expect a solid 0.3% increase in core control group sales, which, with prices falling in June, will translate into strong real consumption growth to close out the second quarter,” the firm wrote in a note. note on Friday.
“The consumer is still in solid shape, supported by a labor market that is cooling, not collapsing, and the strength of household balance sheets.”
Thursday’s inflation data turned markets upside down, with everything that had been working (read: “Big Seven” names) coming under pressure and what was left behind, mostly small caps, rising. Still, Friday’s rally sent stocks into the weekend with another weekly gain across the board.
July ➡️ September
June inflation data released last week seemed to all but cement the prospect of a rate cut by the Federal Reserve starting in September.
A multi-year low in annual inflation and the first monthly drop in headline inflation since 2020 pushed the odds north of 85% that a rate cut would begin in the fall, data from the CME Group showed.
In June, headline inflation fell 0.1% from the previous month and rose 3% from a year earlier. On a “core” basis, which strips out food and energy costs, consumer prices rose 0.2% from last month and 3.3% from last year.
The Fed is targeting 2% inflation.
The June jobs report released earlier this month raised the temperature on the Fed to act in September. The rise in the unemployment rate to 4.1% signaled that the pace of cooling in the labor market appears to be accelerating and puts the labor market back in the central bank’s focus after nearly two years of inflation being its main concern.
Fed Chairman Jerome Powell’s appearance on Capitol Hill last week made it clear that the central bank’s move this fall will be perceived as a political decision by critics on both sides of the aisle. But the economic basis for a rate cut has only become clearer in recent weeks.
“On balance, the economic data is the most supportive of a rate cut they’ve been all year,” Wells Fargo economists Sarah House and Michael Pugliese wrote in a client note this week.
As Jared Blikre of Yahoo Finance noted this week, the unemployment rate is now on the cusp of triggering the Sahm Rule, which measures the rate of increase in the unemployment rate and has been a leading indicator in each of the past nine U.S. recessions. .
On July 31, Powell will hold a press conference following the conclusion of the Fed’s next two-day policy meeting. That event, along with Powell’s speech at the Jackson Hole Economic Symposium in late August, will give the chairman plenty of opportunities to gauge the markets for a move in September.
Weekly calendar
Monday
Economic data: New York Empire State Fed Manufacturing Index, July (-6 expected, -6 previously)
gains: Goldman Sachs (GS), BlackRock (BLK)
Tuesday
Economic data: Retail sales, June (-0.2% expected, +0.1% previously); Import price index, June (-0.1% expected, -0.4% previously); Export price index, June (-0.1% expected, -0.6% previously); NAHB Home Builder Sentiment, July (43 expected, 43 ago)
gains: Bank of America (BAC), Morgan Stanley (MS), UnitedHealth (UNH), Charles Schwab (SCHW), Brokers Interactive (IBKR), Progressive (PGR), PNC Financial (PNC), State Street (STT)
Wednesday
Economic data: Housing Starts, June (+1.8% expected, -5.5% previously); Building permits, June (-0.6% expected, -3.8% previously); Industrial production, June (+0.4% expected, +0.9% previously); The Beige Book of the Federal Reserve
gains: Johnson & Johnson (JNJ), United Airlines (UAL), ASML (ASML), Discover (DFS), US Bancorp (USB), Citizens Financial (CFG), Ally Financial (ALLY), Synchrony (SYF), Alcoa (AA ), Kinder Morgan (KMI), Steel Dynamics (STLD)
Thursday
Economic data: Initial jobless claims, July 13 (228,000 expected, 222,000 earlier); Continued unemployment claims (1.852 million previously)
gains: TSMC (TSM), Netflix (NFLX), Domino’s (DPZ), Blackstone (BX), Alaska Air (ALK), Abbott Labs (ABT), Novartis (NVS), Textron (TXT), Cintas (CTAS), Intuitive Surgical (ISRG), PPG (PPG)
Friday
Economic data: There are no major economic data to release.
gains: American Express (AXP), Travelers (TRV), Halliburton (HAL), SLB (SLB), Fifth Third (FITB), Regions Financial (RF)
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