TIG - The Investment Gents
U.S. stocks Busy Week is Here Again!
-TIG- The Investment Gents
Publish date: Mon, 25 Jul 2022, 02:35 PM
This week will be the most important of the summer, between economic reports on GDP, the employment cost index and the Federal Reserve meeting, and 175 S&P 500 companies reporting earnings. More than a third of S&P 500 companies are Earnings will be released this week, including the US FAANMG. Microsoft and Google parent Alphabet report on Tuesday, Meta Platforms on Wednesday, Apple and Amazon on Thursday, and blue-chip stocks such as Boeing, McDonald's and Caterpillar to report.
On the economic data front, the U.S. is expected to release its second-quarter gross domestic product on Thursday. The Fed's focus on personal consumption expenditure inflation data will be released Friday morning. Data on home prices and new home sales are released on Tuesday, followed by an index of consumer confidence on Friday. These economic data should intensify the debate about whether the economy is heading for or has slipped into recession. With the economy shrank by 1.6% in the first quarter, that means the U.S. economy will slip into a technical recession if the latest figures continue to slide.
At of now, the market forecasts for the second quarter GDP of the United States are seriously divided. As the biggest driving force of the economy, U.S. consumer spending still maintains steady growth, the labor market remains tight, and the trade deficit and inventories that dragged down the growth rate in the last quarter have also improved. Therefore, the economic performance in the second quarter is expected to be better than that in the first quarter. But manufacturing data has a weak trend. The initial value of the U.S. Markit Manufacturing PMI in July was 52.3, the lowest since August 2020; the initial value of the U.S. Markit Service PMI in July was 47, the lowest since June 2020. The analysis pointed out that the initial value of the PMI in July showed that the US economy is deteriorating worryingly. Excluding months during the Covid-19 lockdown, output is falling at a rate not seen since the 2009 global financial crisis.
On Thursday, the Fed will announce its July interest rate decision, followed by a news conference by Fed Chairman Jerome Powell. Economists widely expect the Fed to raise interest rates by another 75 basis points after last month. As the U.S. CPI unexpectedly "broken 9" in June, the market once bet that the Fed would raise interest rates by 100 basis points in July. However, due to weak manufacturing and consumption data in the market, the market's expectations for the Fed to raise interest rates are gradually reducing. But it is already the most aggressive rate hike route in decades, and it has also heightened fears of a recession. The July meeting comes as investors try to determine whether the Fed's tightening has already or will trigger a recession. That makes economic reports in the coming week all the more important.
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