Consumers will be the focus next week as investors head into the height of earnings season and await some key macroeconomic reports. So far, only 14% of S&P 500 companies have reported earnings. But investors are in for a deluge of reports next week, when about 20% of the index will report, with another 30% due the following week. As one strategist noted, Wall Street is about to get insight into the economy from more than half of the broad market index. The results could give investors a key piece of information. Now that inflation appears to be coming down from its highs, many have turned their attention to the consumer to gauge how quickly the Federal Reserve can cut interest rates to avert a potential economic collapse. With some recent signs of slowing growth, corporate results and commentary could give investors a clearer view of how the consumer is holding up. For investors, that could determine what happens next for the markets. The S&P 500 has fallen this week as investors have moved away from large-cap tech leaders to companies that have lagged behind the market this year, such as small-cap companies. On Friday, Nvidia posted a loss of more than 8% for the week, while the Russell 2000 index of small-cap companies outperformed the three major indexes, gaining 1.7%. .RUT 5D mountain Russell 2000 Investors are weighing whether these moves are a sign of a rotation trade that could lift the broader market, or a sign of an imminent correction as the tech sector pulls back. Some are predicting that stocks are due for volatility in the near term, but could rally toward the end of the year. “We may be due for a pause in stocks and maybe we’ll go sideways,” said Terry Sandven, chief equity strategist at U.S. Bank Asset Management Group. “That doesn’t mean the bear market is here. We may be due for some support and compensation as we get closer to October, and then we have a clear view into the new year.” On Friday, the S&P 500 had its worst week since April, falling about 2%. The Nasdaq Composite dropped more than 3%. The Dow Jones Industrial Average was the only one to end the week with a gain, up 0.7%. Earnings season has started strongly. Of the 14% of S&P 500 companies that reported results, about 82% reported positive surprises. Banking results — which investors have continued to scrutinize after last year’s regional institutional crisis — are mostly done, with the companies themselves largely unscathed. But more consumer-related companies are due to report next week, including some notable names that could provide insight into the housing sector. Commercial real estate firm CBRE is expected to report, as are paint and coatings maker Sherwin-Williams and appliance maker Whirlpool. These names could provide insight into a crucial component of inflation that makes up a large part of the consumer price index and personal consumption spending report. While housing has recently started to show some signs of slowing, investors want more confirmation that it’s coming off its highs. “It’s a key component of household value and consumer health,” said Charles Ashley, portfolio manager at Catalyst Funds. “A strong housing market is important for the economy overall, and I also think it’s important for us to read the tea leaves on what the Fed is going to do next.” Credit card company Visa reports next week after American Express’s results this week suggested that inflationary pressures are reaching the consumer high. There will also be some early reports from Magnificent Seven on the deck next week. On Tuesday, Alphabet, the parent company of Google and Tesla, will give investors some early readings on the AI trade ahead of the bulk of its reports later this month. Wall Street is also awaiting a full slate of macroeconomic reports next week, with some key data on economic growth and inflation that could help investors weigh how the Fed can balance the two as the economy heads into a soft landing. “I think the Fed needs to be aware that the economy could deteriorate faster than everyone is expecting right now,” Ashley said. “We’ve already seen some weakness in consumer a little bit, and a little bit in housing. So if the Fed is too slow to act, that could accelerate faster than I think the market is expecting.” The Commerce Department is due to release its preliminary reading of second-quarter gross domestic product on Thursday. It is expected to show an annual increase of 1.9%, up from 1.4% in the first quarter, according to economists surveyed by FactSet. The June personal consumption expenditures price index, the Fed’s preferred inflation gauge, is due on Friday. It is expected to show a 0.1% monthly gain in the core reading, roughly in line with the previous month’s reading, and 2.5% from a year ago, down 0.1 percentage point from May. The all-item reading is expected to rise 0.1% monthly and 2.4% annually. The Fed is targeting 2% inflation. Elsewhere, existing home sales data for June is also due out early in the week. Next week’s calendar All times are EST. Monday, July 22 8:30 a.m. Chicago Fed National Activity Index (June) Earnings: Verizon Tuesday, July 23 10 a.m. Existing Home Sales (June) 10 a.m. Richmond Fed Index (July) Earnings: Visa, Enphase Energy, Capital One Financial, Texas Instruments, Tesla, Alphabet, Freeport-McMoRan, Lockheed Martin, Sherwin-Williams, Comcast, Coca-Cola, Kimberly-Clark, General Motors, United Parcel Service, Philip Morris International, GE Aerospace Wednesday, July 24 9:45 a.m. Composite Preliminary PMI (July) 9:45 a.m. Markit Manufacturing Preliminary PMI (July) 9:45 a.m. Markit Services Preliminary PMI (July) Earnings: O’Reilly Automotive, Chipotle Mexican Grill, International Business Machines, Las Vegas Sands, Ford Motor, Align Technology, Lamb Weston, NextEra Energy, AT&T, GE Vernova Thursday, July 25 8:30 a.m. Continuing Jobless Claims (07/13) 8:30 a.m. Initial Durable Goods Orders (June) 8:30 a.m. Initial Preliminary GDP (Q2) 8:30 a.m. Initial Claims (07/20) 8:30 a.m. Initial Wholesale Inventories (June) 11 a.m. Kansas City Fed Manufacturing Index (July) Earnings: American Airlines, CBRE, Valero Energy, Hasbro, Tractor Supply, RTX, Northrop Grumman, Southwest Airlines, Honeywell International, AbbVie, PG&E, Norfolk Southern Friday, July 26 8:30 a.m. PCE Price Index (June) 8:30 a.m. Personal Income (June) 10 a.m. Final Michigan Sentiment Index (July) Earnings: T. Rowe Price Group, Bristol-Myers Squibb, Colgate-Palmolive, 3M
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