This will be a busy week. The Fed meets and a rate hike is expected; an avalanche of earnings come out, including some big tech names; key inflation data will be released; and the first reading of second-quarter GDP hits the tape, notes John Eade, president of Argus Research.
The Dow Jones Industrial Average ended last week up 2.1%, the S&P 500 gained 0.7%, and the Nasdaq lost 0.6%. Year-to-date, the DJIA is up 6%, the S&P is up 18%, and the Nasdaq is higher by 34%.
The Fed is expected to announce a rate hike on Wednesday. The odds of that are currently 99%, so Wall Street is already looking to the next meeting, which is in September. The odds of a hike at that meeting are around 16%. But September is a long time away.
On the earnings calendar, 150 S&P 500 companies will report on their last quarter. Today the list includes Alphabet, Microsoft, Xerox, Verizon, GE, and General Motors. On Wednesday, Meta Platforms, Boeing, AT&T, Hilton, Chipotle, and Coca-Cola. On Thursday, Amazon.com, Intel, Comcast, McDonald’s, Bristol Myers Squibb, International Paper, Northrop Grumman, Southwest Airlines, Ford, and U.S. Steel. And on Friday, Exxon Mobil, Chevron, Procter & Gamble, and Colgate-Palmolive.
As of last Friday, 89 companies had reported, or 18%. So far, earnings are 8% below the same quarter last year. Consumer Discretionary and Communication Services are performing the best and Energy and Basic Materials are performing the worst.
On the economic calendar, Wednesday features New Home Sales. On Thursday, the advance report for 2Q GDP will come out. The first-quarter reading finalized at 2%. Argus sees 2% for 2Q. Thursday also features Durable Goods Orders.
On Friday, the Personal Consumer Expenditures index will be updated. In May, PCE came in at 3.8%. Argus sees this pace slowing to 3.5% for June. For Core PCE, taking out volatile food and energy prices, the May print was 4.6%. We see a slowing to 4.4% for June. Personal Income, Personal Spending, and Consumer Sentiment also will be released.
Last week, mortgage rates dropped to 6.78% for the average 30-year fixed-rate mortgage. Gas prices increased a penny to $3.56 per gallon for the average price of regular gas. The Atlanta Fed GDPNow indicator for 2Q currently calls for expansion of 2.4%.