Big Week for Q2 Earnings, Economic Data



Monday, July 25, 2022

We’re starting off relatively slowly, but this will be the biggest week for stock market data in several weeks: Home Sales, Durable Goods, Jobless Claims, PCE Inflation and Q2 GDP are all expected between now and Friday. Add in 1000 or so earnings reports released and the last Federal Open Market Committee (FOMC) meeting until after Labor Day, and it’s not hard to see we’re in for an eventful week.

Let’s start with the

FOMC meeting

, where Fed presidents assemble tomorrow and Wednesday to decide on monetary policy. By most accounts, it’s already a done deal: a 75 basis-point (bps) interest rate hike would move the Fed funds rate to 2.25-2.50%, up from 0.00-0.25% less than half a year ago. It would be the second-straight such raise, which we hadn’t seen since the first term of the Clinton administration.

The idea is to quash inflation numbers, which are at 40-year highs (+9.1% on the most recent Consumer Price Index print), while also keeping employment and consumer activity buoyant enough to skate around a recession. No one knows if 75 bps this time around is the magic bullet, but it is the apparent compromise between those voting Fed members who want to stamp out inflation all at once versus those who believe inflation can be contained with less aggressive methods.

After all, we may already be in a technical recession — two straight quarters of negative

Gross Domestic Product (GDP)

growth. In Q1, we saw a -1.6% headline emerge, and by many accounts Q2 was a tougher quarter economically than Q1. However, much of those Q1 losses had to do with supply-chain inventories which were the product of late-stage global pandemic conditions. For Q2, the Energy sector is expected to have dragged Q2 into positive GDP territory: +0.3% on the consensus as of today.


Personal Consumption Expenditures (PCE)

for core June reads are expected to have doubled month over month but stayed even year over year: +0.6% and +4.7%, respectively. “Core” refers to the stripping out of volatile food and energy costs, and this doubling in short-term would reflect transitory inflation metrics, such as high gasoline prices, having become more entrenched into other aspects of the economy, such as Transportation and the costs of goods delivered.


Weekly Jobless Claims

have been climbing notably of late, surpassing 250K for the first time in recent memory. These are expected to stabilize where they are, but it’s still a gain of more than 4000 new claims on the four-week moving average. This would tend to argue against Treasury Secretary Janet Yellen’s insistence that employment is very strong in the U.S. at the moment. But we are hearing in Q2 earnings conference calls about companies “right-sizing” heading into a possible recessionary period.

In terms of Q2 earnings, this week looks to carry the heaviest amount of reports from notable industry leaders, including nearly all of the so-called FAANG stocks — Google parent

Alphabet

GOOGL


Tuesday, ex-Facebook

Meta Platforms

META


Wednesday, and both

Amazon

AMZN


and

Apple

AAPL


Thursday. In addition, we’ll see results from

Microsoft

MSFT


,

Boeing

BA


,

Ford

F


,

Pfizer

PFE


and both

ExxonMobil

XOM


and

Chevron

CVX


.

Pre-market futures are looking to build back from Friday’s sell-off in what was otherwise a terrific week: the Nasdaq grew more than +3% in the past five trading days alone. Currently, the Dow is +116 points, the S&P 500 is +12 and the Nasdaq is +20 points. So far, July is easily the best-performing month of 2022, with the Nasdaq +7.3% so far, the S&P +4.7% and the Dow +3.7%. Cycle lows are now more than a month in our rearview mirror.


Questions or comments about this article and/or its author? Click here>>


5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.


Today, See These 5 Potential Home Runs >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.

Click to get this free report


To read this article on Zacks.com click here.


Zacks Investment Research


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report