July’s biggest economic event is behind us.
For the rest of the month, investors will be most focused on the corporate earnings calendar.
Netflix (NFLX) has become the first major technology company to report quarterly earnings during the current reporting period, with the streaming giant set to release results after the close of trading on Thursday.
And with AI trading continuing to dominate Wall Street, investors will be paying close attention to earnings from ASML (ASML) and Taiwan Semiconductor Manufacturing (TSM), which are due to report on Wednesday and Thursday, respectively.
ASML is a leading manufacturer of lithography equipment that allows companies to actually print designs onto new chips, while TSMC is the world’s largest chipmaker.
Elsewhere on the earnings calendar, Goldman Sachs (GS), Morgan Stanley (MS), and Bank of America (BAC) will report results for the major Wall Street banks, while Dow components Johnson & Johnson (JNJ), American Express (AXP), UnitedHealth (UNH), and Travelers (TRV) are also scheduled to report results.
Politics will also be a top 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 literal attack. [Saturday night]”
The Republican National Convention is scheduled to take place in Milwaukee this week, where Trump will be formally nominated as the Republican presidential candidate.
The economic data calendar is sparse, highlighted by a June retail sales report on Tuesday. Investors and Fed watchers will be closely watching the results for signs of further weakening among the U.S. consumer after May’s results showed an unexpected slowdown in spending.
A team at Oxford Economics expects retail sales to fall 0.4% in June, with the notable decline being driven by lower gasoline prices. “We expect underlying control group sales to increase robustly by 0.3%, which, combined with lower prices in June, should lead to a stronger pickup in real consumption to close out the second quarter,” the firm wrote in a Friday note.
“The labor market is cooling, not collapsing, and household balance sheets are strong, so consumers remain resilient.”
Thursday’s inflation data transformed the market, sending all of the previously strong stocks (the “Magnificent Seven”) down and sending the left-behind stocks, especially small caps, soaring. Still, Friday’s gains helped stocks generally rise again in weekly gains over the weekend.
The story continues
July ➡️ September
June inflation data released last week appears to have all but cemented expectations that the Federal Reserve will cut interest rates starting in September.
The probability of rate cuts starting in the fall has risen to more than 85%, with annual inflation hitting its lowest level in years and headline inflation posting its first monthly decline since 2020, according to data from CME Group.
Headline inflation fell 0.1% month-on-month in June and rose 3% year-on-year. On a “core” basis, which excludes food and energy costs, consumer prices rose 0.2% month-on-month and 3.3% year-on-year.
The Federal Reserve aims for 2% inflation.
The release of the June jobs report earlier this month raised the likelihood that the Fed will act in September. The unemployment rate rose to 4.1%, suggesting that the labor market is cooling at an accelerating rate, putting the labor market back in focus for the Fed after nearly two years of inflation being its top concern.
Appearing before Congress last week, Fed Chairman Jerome Powell made it clear that the Fed’s actions this fall would be viewed as a political decision by critics on both sides of the aisle, but the economic case for cutting rates has become increasingly clear in recent weeks.
“Overall, the economic data provides the most support for rate cuts so far this year,” Wells Fargo economists Sarah House and Michael Pugliese wrote in a client note this week.
As Yahoo Finance’s Jared Brickle pointed out this week, the unemployment rate is currently on the verge of triggering the Sarm rule, which measures how quickly unemployment is rising and has been a leading indicator in each of the past nine U.S. recessions.
Chairman Powell will hold a press conference following the conclusion of the Fed’s next two-day policy meeting on July 31. This event, along with Chairman Powell’s speech at the Jackson Hole Economic Symposium in late August, will provide ample opportunity for the chairman to prepare markets for any policy changes in September.
US Federal Reserve Chairman Jerome Powell testifies during the Senate Banking, Housing and Urban Affairs hearing reviewing the Semi-Annual Monetary Policy Report to Congress, on Capitol Hill in Washington, DC, July 9, 2024. (Photo by Chris Kleponis/AFP via Getty Images) (Chris Kleponis via Getty Images)
Weekly Calendar
Monday
Economic Data: New York Fed Empire State Manufacturing Index, July (-6 expected, -6 last)
Revenues: Goldman Sachs (GS), BlackRock (BLK)
Tuesday
Economic Data: June Retail Sales (Estimated -0.2%, Previous: +0.1%), June Import Price Index (Estimated -0.1%, Previous: -0.4%), June Export Price Index (Estimated -0.1%, Previous: -0.6%), July NAHB Home Builder Sentiment (Estimated 43, Previous: 43)
Revenues: Bank of America (BAC), Morgan Stanley (MS), UnitedHealth (UNH), Charles Schwab (SCHW), Interactive Brokers (IBKR), Progressive (PGR), PNC Financial (PNC), State Street (STT)
Wednesday
Economic Data: June Housing Starts (Expected +1.8%, Previous -5.5%), June Building Permits (Expected -0.6%, Previous -3.8%), June Industrial Production (Expected +0.4%, Previous +0.9%), Federal Reserve Beige Book
Revenues: 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 for July 13 (estimated 228,000, previous 222,000); continuing jobless claims (previous 1,852,000)
Revenues: 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 scheduled to be released.
Revenues: American Express (AXP), Travelers (TRV), Halliburton (HAL), SLB (SLB), Fifth Third (FITB), Regions Financial (RF)
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