Economy and Markets: The Week Ahead
Investors’ attention this week will be focused on the purchasing managers indexes for the manufacturing and services sectors, presenting outlook for the entire U.S. economy. But the pinnacle of the week is the job market data deluge, coming on Friday, which will shed some light on last month’s developments in terms of jobs created and lost, as well as wage increases. These and other reports will help shape expectations of the Federal Reserve’s monetary decisions in the months ahead.
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Meanwhile, according to FactSet, 51% of the S&P 500 (SPX) companies have already reported; so far, the number of positive earnings surprises is above the recent averages, while the magnitude of these earnings surprises is below their long-term averages. Companies from a variety of industries, with the communication services and information technology sectors in the forefront, reported the favorable earnings surprises. The Consumer Discretionary and Communication Services sectors are leading the way with six of the eleven sectors showing year-over-year profit growth. On the other side, five sectors, led by the Energy, Materials, and Health Care sectors, are experiencing year-over-year profit declines.
So far, the blended earnings decline (combining actual and estimated results) for the second quarter is -7.3%. If the Q2 reporting season ends with the actual decline of -7.3%, it would be the largest earnings contraction since 2020, and the third consecutive quarter that the index’s earnings have decreased.
Meanwhile, stocks continued rallying last week, adding to their first-half run-up. A lower-than-expected PCE inflation number, coupled with much higher-than-expected GDP growth in the second quarter, fueled hopes that the Federal Reserve may be successful in engineering a soft landing. After the Fed’s hike last week, and despite its reiterated concerns over still-high and sticky core inflation, market players don’t expect any more rate increases this year. If next month’s data confirms that the economy is on a firm path to lower inflation, these expectations may ring true, further supporting the stock markets.
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 prominent technology, healthcare, industrial, retail, materials, and energy companies are reporting their Q2 2023 results.
The most anticipated reports this week are, of course, those of Amazon (AMZN) and Apple (AAPL). In addition, there will be several important reports coming from companies in different sectors, such as Advanced Micro Devices (AMD), Kraft Heinz (KHC), Occidental Petroleum (OXY), PayPal (PYPL), ON Semiconductor (ON), Pfizer (PFE), Starbucks (SBUX), Uber Technologies (UBER), Kellogg (K), Moderna (MRNA), 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 Lamb Weston Holdings (LW), Nextera Energy Partners (NEP), Citigroup (C), ASML Holding (ASML), Activision Blizzard (ATVI), Wells Fargo (WFC), Unilever (UL), 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 Tuesday, we’ll receive a reading on July’s ISM Manufacturing PMI, which provides important insight into the overall economic conditions in the United States and is used to anticipate changing economic trends in official data such as GDP growth and inflation.
» On Thursday, we’ll see published a report on July’s ISM Services PMI. The U.S. services sector is the largest and most important GDP contributor. The ISM Services PMI is a forward-looking indicator, providing an important insight into the factors that influence the GDP growth and the inflation.
» On Friday, we’ll see the data on July’s Nonfarm Payrolls and Unemployment Rate, which are considered two of the most important economic indicators. Policymakers follow the shift in the number of positions since it is strongly associated with the health of the economy as a whole. One of the mandates of the Federal Reserve is full employment, and it takes labor market changes into account when determining its policy decisions, which influence the capital markets.
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.
