Investors are heading for their busiest week of the summer, with the U.S. Federal Reserve (Fed) on the verge of raising interest rates by 75 basis points (3 yards),S&P 500 IndexThe top five tech stocks with a weighting of more than one-third are due to report earnings, along with a number of important economic data.
Leo Grohowski, chief investment officer at BNY Mellon Wealth Management, said next week will be the most important week of the summer, with inflation data for the Fed’s decision-making meeting, U.S. gross domestic product (GDP) and Fed policy preferences. , as well as the earnings reports of the 175 companies in the S&P Index.
The market fluctuated wildly in the first two days of several recent Fed meetings, and there was even a 4-yard bet on a single rate hike. But Fed officials have played down the possibility, with economists widely expecting a 3-yard gain in July to extend the June decision.
Markets are now focusing on the next September meeting and gains after that, and the view that the gains will be dovish is gaining momentum.
Grohowski said that if the Fed keeps tightening for too long, the chances of a recession will increase, and he currently forecasts a 60 percent chance of a recession in the next year.
Markets could also be volatile if Fed Chairman Bill Bowler is more hawkish and hawkish than expected.
The U.S. will also release its second-quarter GDP next week, which many agencies predict will shrink again, making the U.S. economy meet the technical definition of a recession, that is, two consecutive quarters of contraction, but the official power to enter a recession rests with the National Institute of Economic Research (NBER) hands.
Outlook is more important than earnings
Another major event is the technology industry financial report. The financial reports of the five technology giants known as “MAMAA” or “MAMAA” will be released next week. Microsoft (MSFT-US)、Alphabet(GOOGL-US) will report results after the U.S. stock market closes on Tuesday, followed by Facebook parent Meta (META-US) debuted on Wednesday, Apple (AAPL-US), Amazon (AMZN-US) U.S. stocks report earnings after the bell on Thursday.
Mellon’s Grohowski said: “The big companies’ view of the outlook is more important than the earnings report itself. Cross-checking the corporate narrative and compiling statistics on what has happened, I believe this is going to be a wildly choppy week.”
Investors are waiting to see how U.S. companies fare amid high inflation and a rising dollar. Second-quarter earnings for the S&P 500 are expected to rise 6.2 percent, according to data through Friday, up from 5.6 percent a week earlier.
One in six companies in the European Stoxx 600 index will also report earnings in the coming week. Refinitiv IBES predicts that these companies are expected to increase their profits by 22% year-on-year. Profits are expected to surge by 185%, but the real estate industry’s surplus may plummet by 70%.
Next week’s earnings from Airbus, Volkswagen and Mercedes parent company Mercedes will provide a glimpse into the state of European exporters, while earnings from retailers and hoteliers could be hit by energy shortages and soaring inflation.
In addition, Swiss Bank (UBS), Credit Suisse (Credit Suisse), Deutsche Bank (Deutsche), Barclays (Barclays), France Paris (BNP Paribas) will also announce second quarter earnings.