A confluence of positive factors, including strong earnings, a dovish Fed, and a resilient economy, sets the stage for a market surge 👀
As we enter the second half of July, the biggest economic event of the month is behind us, and investors are shifting their focus to the corporate earnings calendar. With a slew of reports from tech giants, banks, and healthcare companies, this week is shaping up to be a pivotal moment for the stock market. And I’m bullish on it! The fundamentals are strong, and I believe we’ll see a continuation of the upward trend.
Earnings Season Heats Up 🔥
Netflix (NFLX) will kick off the earnings parade on Thursday, followed by reports from ASML (ASML) and Taiwan Semiconductor Manufacturing Company (TSM) on Wednesday and Thursday, respectively. These companies are key players in the AI trade, which has been dominating Wall Street. I’m expecting strong results from these companies, which will further fuel the bull run. Investors will be closely watching their results for signs of continued growth and innovation.
In addition to the tech sector, reports from Goldman Sachs (GS), Morgan Stanley (MS), and Bank of America (BAC) will wrap up results from Wall Street’s biggest banks. Dow members Johnson & Johnson (JNJ), American Express (AXP), UnitedHealth (UNH), and Travelers (TRV) are also expected to report, providing a broad snapshot of the health of the US economy. I’m optimistic about the banking sector, and I believe we’ll see strong results from these companies.
Politics in the Spotlight 🕺
Politics will also play a significant role in the markets this week, with the Republican National Convention being held in Milwaukee. Donald Trump is set to be formally named the Republican nominee for president, and investors will be watching for any signs of potential policy changes or shifts in the political winds. While politics can be unpredictable, I believe the market will shrug off any potential volatility and continue its upward trend.
Economic Data Calendar 🗓️
The economic data calendar is sparse this week, but Tuesday’s retail sales report for June will provide valuable insights into the health of the US consumer. After May’s results showed a surprise slowdown in spending, investors and Fed watchers will be monitoring the results for signs of further weakness. However, I’m not too concerned about the consumer sector, and I believe we’ll see a rebound in spending.
Federal Reserve Action 🎯
The Federal Reserve’s next two-day policy meeting, which concludes on July 31, will be closely watched. Fed Chair 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. However, the economic basis for a rate cut has only grown clearer in recent weeks. I believe a rate cut is likely, and it will be a welcome boost to the economy.
Rate Cut Odds Increase 📈
In fact, 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 last nine US recessions. This, coupled with the multiyear low in annual inflation and the first monthly drop in headline inflation since 2020, has pushed the odds of rate cuts beginning in September to over 85%. I’m bullish on the economy, and I believe a rate cut will further fuel the bull run.
Calendar Breakdown 🤝
Here is a breakdown of the key events and earnings reports for the remainder of the week:
Monday
Economic data: New York Fed Empire State Manufacturing index, July
Earnings: Goldman Sachs (GS), BlackRock (BLK)
Tuesday
Economic data: Retail sales, June; Import price index, June; Export price index, June; NAHB homebuilder sentiment, July
Earnings: 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: Housing starts, June; Building permits, June; Industrial production, June; Federal Reserve Beige Book
Earnings: 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; Continuing jobless claims
Earnings: 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
No major economic data set for release.
Earnings: American Express (AXP), Travelers (TRV), Halliburton (HAL), SLB (SLB), Fifth Third (FITB), Regions Financial (RF)
