Economy and Markets: The Week Ahead
Investors’ attention this week will be split between the Federal Reserve’s interest rate decision, expected on Wednesday, and earnings reports from some Big Tech companies and a large number of firms from all economic sectors.
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The Federal Reserve is expected to lift its policy rate by 25 basis points, bringing it to 5.5%, its highest in 22 years. While a rate hike this week is almost certain, questions remain regarding the Fed’s future moves, with increasingly more market participants counting on this rate increase to be the last in the current economic cycle. Although there are apparent signs of slowing inflation, unemployment has remained close to record lows, and the first quarter’s GDP growth has been revised upwards significantly. While the contradicting indicators may well mean that the Fed has succeeded in bringing down inflation without pushing the economy into a recession, the policymakers will certainly be looking for proof of this hypothesis in the data emerging in the weeks until their next meeting.
Meanwhile, according to FactSet, 18% of the S&P 500 (SPX) companies have already reported; so far, the number of positive earnings surprises is in line with recent averages, while the magnitude of these earnings surprises is equal to the 10-year average. Six of the eleven sectors are reporting year-over-year earnings growth, led by the Consumer Discretionary and Communication Services sectors. On the other hand, five sectors are reporting (or are expected to report) a year-over-year decline in earnings, led by the Energy, Materials, and Health Care sectors. The S&P 500 companies are expected to report a decrease in earnings for the third straight quarter.
In this uncertain environment, investors are advised to base their decisions on trustworthy data and analysis.
Upcoming Earnings and Dividend Announcements
This week will be very busy with earnings reports, as Big Tech companies report their Q2 2023 results.
The most anticipated reports this week are those of Alphabet (GOOGL), Microsoft (MSFT), Amazon.com (AMZN), and Meta Platforms (META). In addition, there will be several important reports coming from companies in different sectors, such as General Motors (GM), Verizon Communications (VZ), Visa (V), Coca-Cola (KO), Tower Semiconductor (TSEM), AbbVie (ABBV), McDonald’s (MCD), Exxon Mobil (XOM), and many more.
Companies’ reporting dates, consensus EPS forecasts, past data, analyst ratings, and price targets can be found on the TipRanks Earnings Calendar.
This week, Ex-Dividend dates are coming for the payouts of Lowe’s (LOW), Kinder Morgan (KMI), Bank of New York Mellon (BK), Pfizer (PFE), Conagra Brands (CAG), Morgan Stanley (MS), and other dividend-paying firms.
Companies’ Ex-Dividend and Dividend Payment dates, analyst ratings, and price targets can be found on the TipRanks Dividend Calendar.
Upcoming Economic Calendar Events
There are several very important reports scheduled to be published in the next few days:
» On Monday, we’ll receive preliminary readings on S&P Global Manufacturing PMI and Services PMI, which provide important insight into the overall economic condition in the United States and are used to anticipate changing economic trends in official data such as GDP growth.
» On Thursday, we’ll see published a preliminary estimate of the Q2 2023 GDP Growth Annualized. After the first quarter’s figures were upwardly revised in a significant manner, policymakers and investors will be especially keen to learn the details of the Q2 report.
» On Friday, we’ll see the data on June’s Core Personal Consumption Expenditures (Core PCE), the Federal Reserve’s preferred gauge of inflation. A stronger-than-expected reading could portend a possible hawkish shift in the Fed’s forward guidance.
Current and scheduled economic reports, Fed statements, and other releases, as well as their level of impact on stock markets, can be found on the TipRanks Economic Calendar.
Major Economic Events of the Past Week
» July’s NY Empire State Manufacturing Index fell to 1.1 from June’s 6.6.
» June’s Retail Sales rose 0.2%; they were expected to rise as much as in June, 0.5%.
» June’s Industrial Production fell 0.5% from May when it declined by the same rate.
» June’s Housing Starts tumbled 8% from May’s surge of 15.7%; they were expected to increase by 7.2%. Building Permits fell 3.7% from May’s increase of 5.6%.
» Initial Jobless Claims for the week ending July 14th came in at 228K versus the expected 242K. Continuing Jobless Claims for the week ending July 7th were at 1.754M, higher than the expected 1.729M.
