The Federal Reserve meets this week. Spoiler alert: Essentially no one thinks a rate cut is likely. Meanwhile, it’s another peak week for corporate earnings. So far, 65% of S&P 500 Index (SPX) companies have reported and earnings are up 13% from the prior-year quarter, notes John Eade, president of Argus Research.
The earnings calendar this week includes Walt Disney Co. (DIS), Uber Technologies Inc. (UBER), DoorDash Inc. (DASH), and Novo Nordisk AS (NVO) on Wednesday; and Anheuser-Busch Inbev SA (BUD), Warner Bros. Discovery Inc. (WBD), and Cloudflare Inc. (NET) on Thursday.
S&P 500 Index (SPX)
The 13% growth we’ve seen so far is above the consensus that called for EPS growth of about 3%-8%. It also follows 17% growth in 4Q24 EPS and 9% growth in 3Q24, according to LSEG. For the current quarter, healthcare is the leading sector, with earnings up 45%, and energy is the bottom, down 18%.
On the economic calendar, the big event is the Fed’s rate decision comes on Wednesday. Odds are only at 3% for a rate cut, according to the CME FedWatch rate tool.
Turning to other data, the Atlanta Fed GDPNow measure forecasts 1.1% for 2Q. This follows the surprise decline of 0.3% for 1Q GDP printed last week. The Cleveland Fed Inflation Nowcast forecasts a 2.2% rate for CPI in May, which is lower than the April rate and close to the Fed’s 2% target.
After this week, the Fed’s next meeting is on June 18, with odds at 42% for a rate cut. That’s lower than last week’s odds, according to the CME FedWatch rate tool. After that, the Fed meets on July 30 and odds for a cut jump to 89%.
