Wall Street is about to experience its busiest week of the summer. Big companies will be showing figures on their revenue.
Federal Reserve Chairman Jerome Powell testifies during a House Financial Services Committee hearing on June 21, 2023. (Source: Tom Williams/CQ-Roll Call, Inc)
Busy Week for the Big Companies
More than 150 S&P 500 companies, including Microsoft (MSFT), Alphabet (GOOGL), and Meta (META), will disclose their quarterly results next week, according to a published article on Yahoo! Finance. Amid this earnings frenzy, the Federal Reserve will issue its most recent policy announcement this week. It is expected to announce an additional increase to its benchmark interest rate of 0.25%.
Investors will also be kept busy by the economic calendar, which includes the first estimate of second-quarter GDP, two assessments of consumer confidence, statistics on inflation, and a preliminary assessment of factory activity in July.
This media frenzy comes after a week in which the Dow Jones Industrial Average (DJI) assumed a leading position in the market. The Blue-Chip index increased by 2.1% throughout the week and ended Friday’s trading session with its 10th consecutive winning session. The Nasdaq Composite (IXIC), on the other hand, was the week’s underperformer, declining 0.6%. The benchmark S&P 500 gained 0.7%, bridging the gap.
Results from Tesla (TSLA) and Netflix (NFLX), two of this year’s tech company highfliers, caused investors to reduce their exposure, dragging down the Nasdaq. One of the major topics for investors this week will be if this pattern holds during earnings season. At 2:00 p.m., the US Federal Reserve will reveal its most recent monetary policy decision ET this week, with a press conference by Fed Chair Jay Powell scheduled for 30 minutes later.
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What would be Fed’s Decision?
According to CME Group data released on Friday, markets are currently pricing in a 99.8% possibility that the Fed would increase its benchmark interest rate target range by an additional 0.25% to 5.25%-5.5%. The fed funds rate would reach its highest level since 2001 as a result.
Bank of America economist Michael Gapen stated in a note on July 19 that “the cooling of the economy is only occurring gradually and we think most committee members believe further rebalancing of supply and demand is needed to ensure disinflation will continue.” He continued, “We expect the Fed to increase the target range for the Federal funds rate by 25 basis points to 5.25-5.50%.
Investors will be paying close attention to Powell’s remarks as the discussion over whether there needs to be another rate increase later this year is likely to continue into the summer.
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