Earnings, Federal Reserve are next big catalysts as stocks enter next week on a recovery

Trader on the New York Stock Exchange, July 20, 2021.

Source: NYSE

here it comes one of the biggest market weeks of the summer.

First, the Federal Reserve meets on Tuesday and Wednesday. While no action is planned, there may be some mention of the central bank’S possible the wind down of his bond program. That could move markets from tapering of the central bank buying bonds is seen as the first step on the way to interest rate excursions.

Then there are around 165 S&P 500 companies releasing earnings relationships, including the largest tech names: Apple, Microsoft, Amazon, Alphabet and Facebook. Tesla is reporting, as are industrial heavyweights Boeing and Caterpillar. There are many of consumer names, including Procter & Gamble and McDonald’s.

There is also economic important news. The second quarter it should be the peak period for post- Pandemic growthe gross domestic product for the quarter will be released on Thursday. Friday, the Fed favorite the measure of inflation, the inflation index of personal consumption expenditure, is published.

Fresh boils for main indices

The three major US stock indices enter the busy week with new record closing. The Dow closed above 35,000 for the first time on Friday. The S&P 500 gained 1% to close at 4,411.79 and the Nasdaq Composite ended the day up 1%.

“I think earnings will be the show, and if the pattern we have seen so far continues next week, and it is likely that it will, will find a market which has a path of minimal upside resistance and I think it is good news”said Art Hogan, chief market strategist at National Securities.

According to Refinitiv, earnings for the second quarter they are trying to be up 78.1%.

“It’s going to be crazy,” Hogan said. “I think the order of size of earnings beats is still underrated and I think it will continue next week: 87% of companies are beating estimates “.

Hogan said soon in earnings season, stocks of companies that beat expectations didn’t react, but now they are and this should Keep it going. The fact a handful of the biggest market equities – like Apple, Microsoft and Alphabet: Relationships so close to each other could have an impact.

“This is like the World Series of earnings slap in the goal of summer, “he said.

Stock rebound

Investors also you are looking at the behavior of markets themselves. Stocks finished the week with solid earnings, but the bruise sells-off Monday has left its brand. Some strategists say it could have been a warning sign for more turbulence after in the quarter.

Actions took their cue from 10-year Treasury yield, in drop on Monday on fears the delta variant of Covid could slow down global growth. the yield hit a bass of Tuesday 1.12% before reversing. As the benchmark’s return increased, stocks rose.

For now, the stocks appear to be set for more earnings. The Dow closed on past week at 35,061.55, up about 1%. The S&P 500 gained 1.9% for the week, closing at 4,411.79. The Nasdaq climbed 2.8% week to date, and the small-cap Russell 2000 increased 2.1%.

The communication services, which include the names of the Internet, were the best performing sector in the past week with a gain of 3.2%. The technology was also strong, up 2.8%. The discretionary consumer was also a leading sector, up 2.9%. Cyclical industrials e material delayed with fractional gains and energy was slightly less.

Scott Redler, strategic director with T3Live.com, the names of Big Tech said like Apple and Microsoft are already going on well of earnings, so it will be important to see how they trade.

“Some things have a price for perfection and some are not, “he said.” Microsoft is already at an all-time high. It has a price for perfection. It will be interesting to see if Apple can hold and stay above $ 150. “Apple closed at $ 148.56 per minute share Friday.

Fed ‘taper talk’

Ben Jeffery, US rate strategist at BMO, said Treasury yields could find a catalyst in the Fed. Expects 10year a begin moving down again, And says it could possibly touch a minimum of 1.10%. the 10-year it was at 1.28% on Friday afternoon.

Strategists don’t expect to see much new in the Federal Reserve Statement. Comments await Fed President Jerome Powell for guide on the central bank’S move towards the taper back its quantitative easing program.

The Fed is expected to announce that liquidation is officially being discussed down the program well before it actually starts. Many Fed observers believe guidance will come in late August, at the Jackson Hole central banksymposium, or later in the fall.

“I think it will be interesting to see how dove Powell tries to be with the delta variant risk and concerns about it, ”said Jeffery.

Luke Tilley, chief economist at the Wilmington Trust, doesn’t expect much new by Powell this week. “I’m really aiming for Jackson Hole as the most likely candidate for a turning point for policy and communication, “he said.” However, next the meeting of the week could set the stage for That with some statements that indicate us towards some improvement in the economy. They will highlight the new risks of the delta variant, and this is the risk we think they are pointing out. “

Slow down the bond program it is important because it is a signal that the Fed is on the way to reverse its easy policies, including in its ultimately zero policy rate. Tilley said the central bank it will probably take a year wrap down its $ 120 billion a month in bond purchases, and then the door is open to rate excursions.

Investors also stand and watch second quarter GDP to see how how much strength there is in the economy.

According to CNBC / Moody’s Analytics rapid update, a survey of economists expect second quarter growth grow in media 9.7%. It is expected to be the peak period for growth, and the forecast media for Third quarter growth is 8.3%.

Tilley said he expects growth for 2021 year of from 7% to 7.5%.

Calendar of the week in advance


I earn: Tesla, Lockheed Martin, F5 Networks, Check Point Software, Hasbro, LVMH, Otis Worldwide, Ameriprise

10:00 New home sales


powered begins 2 day meeting

I earn: Apple, Alphabet, Microsoft, 3M, Visa, Advanced Micro Devices, General Electric, Boston Scientific, PulteGroup, Raytheon, JetBlue, Archer Daniels Midland, Chubb, Mondelez, Starbucks, Hawaiian Holdings, Waste Management, Corning, Sherwin-Williams, UPS , Stanley Black and Decker, Teradyne, Cheesecake Factory

8:30 Durable goods

9:00 FHFA home prices

9:00 Case-Shiller home prices

10:00 Consumer confidence


I earn: Boeing, Facebook, Pfizer, Ford, Qualcomm, McDonald’s, Bristol-Myers Squibb, PayPal, General Dynamics, GlaxoSmithKline, Norfolk Southern, Automatic Data, CME Group, Garmin, Moody’s, Steve Madden, Penske Auto Group, Hess, Aflac, Canadian Pacific Railway, Fortune Brands, Samsung

8:30 Anticipated economic indicators

14:00 Fed statement

14:30 Briefing by Fed President Jerome Powell


I earn: Amazon, Merck, Comcast, Airbus, Anheuser-Busch InBev, MasterCard, Intercontinental Exchange, AstraZeneca, Hilton Worldwide, Northrop Grumman, Altria, Hershey, Yum Brands, American Tower, Gilead Sciences, Pinterest, Deckers Outdoors, First Solar, Beazer Homes, US Steel, Molson Coors Brewing, Southern Co., Tempur Sealy, Textron, Nielsen, Valero Energy, Martin Marietta Materials

8:30 Unemployment claims

8:30 Q2 GDP

10:00 Waiting home sales


I earn: Caterpillar, Chevron, ExxonMobil, Procter & Gamble, Colgate-Palmolive, AbbVie, Booz Allen, Lazard, Church & Dwight, Johnson Controls, Illinois Tool Works, Cabot Oil & Gas, CBOE Global Markets

8:30 Expenses for personal consumption

8:30 Work cost index Q2

9:00 am St. Louis Fed President James Bullard

9:45 am Chicago PMI

10:00 Consumer sentiment

20:30 Fed Governor Lael Brainard

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