“The pace of earnings so far this month has been positive, economic data has been hanging in there, and we’re even starting to get some sense of clarity on tariffs. You can’t fault investors for being optimistic,” said Bespoke Investment Group.
Second-quarter corporate earnings season continues in full force, and investors await fresh reports from high-profile companies this week, including Microsoft (MSFT), Meta Platforms (META), Apple (AAPL), Amazon.com (AMZN), Mastercard (MA), Visa (V), Arm (ARM), Qualcomm (QCOM), KLA Corp. (KLAC), Procter & Gamble (PG), United Parcel Service (UPS), Exxon Mobil (XOM), and Chevron (CVX). According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +3.2% increase in quarterly earnings for Q2 compared to the previous year, slightly above the pre-season forecast of +2.8%.
Market watchers will also focus on the Federal Reserve’s interest rate decision and Chair Jerome Powell’s post-policy meeting press conference. The central bank is widely expected to leave the Fed funds rate unchanged in a range of 4.25% to 4.50%. The decision comes amid criticism of Mr. Powell by President Trump and repeated calls for the central bank to lower interest rates. Powell and other Fed officials have emphasized the importance of patience as the Trump administration’s tariffs pose a risk of reigniting inflation.
“We believe this [Fed] meeting will be a non-event with rates left on hold and quantitative tightening likely left unchanged,” ING analysts said in a note.
This week’s top-tier U.S. economic data will offer insight into whether the Fed may be justified in lowering interest rates in the coming months. The advance estimate of second-quarter U.S. gross domestic product, the July Nonfarm Payrolls report, and the latest reading of the core personal consumption expenditures price index will be the main highlights. Any indications of a cooling labor market or slowing economy could boost the likelihood of rate cuts resuming in September or October. Other noteworthy data releases include the U.S. JOLTs Job Openings, the Conference Board’s Consumer Confidence Index, the S&P/CS HPI Composite – 20 n.s.a., ADP Nonfarm Employment Change, Pending Home Sales, the Employment Cost Index, Initial Jobless Claims, Personal Income, Personal Spending, the Chicago PMI, Average Hourly Earnings, the Unemployment Rate, the S&P Global Manufacturing PMI, Construction Spending, the ISM Manufacturing PMI, and the University of Michigan’s Consumer Sentiment Index.
Meanwhile, the August 1st deadline for the U.S. to impose reciprocal tariffs also takes center stage. Optimism has been building that the U.S. will reach trade agreements with multiple countries before the deadline.
The U.S. economic data slate is largely empty on Monday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.373%, down -0.30%.
The Euro Stoxx 50 Index is up +0.82% this morning after the European Union and the U.S. reached a trade deal over the weekend. Semiconductor, automobile, and pharmaceutical stocks led the gains on Monday. The deal will see the U.S. place a 15% tariff on most EU goods, which is half the rate threatened by U.S. President Trump earlier this month. At the same time, tariff rates on spirits remain under negotiation. While the trade deal averted a further escalation, some analysts and industry experts were disappointed. For example, the president of Germany’s Ifo Institute for Economic Research described the agreement as a “humiliation for the EU,” highlighting the power imbalance between the two sides. Also, Commerzbank analysts said in a note that European firms will continue to find it “significantly more difficult to export to their most important foreign market,” which will weigh on Europe’s economy. Investor focus now shifts to the first estimate of second-quarter Eurozone gross domestic product on Wednesday and preliminary inflation data for July on Friday. In corporate news, Heineken (HEIA.NA) dropped more than -5% after the Dutch brewer said it was considering all options to address long-term tariff challenges, including relocating production.
The European economic data slate is mainly empty on Monday.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.12%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.10%.
China’s Shanghai Composite Index closed slightly higher today as investors awaited details from U.S.-China trade talks and the upcoming Politburo meeting. Insurance stocks led the gains on Monday after the industry body lowered the reference rate for life insurance products. Rare earth stocks also gained ground. Sentiment was buoyed after the South China Morning Post reported that the U.S. and China are expected to extend their tariff truce by another three months. U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are set to meet in Stockholm later today. U.S. President Donald Trump said on Sunday that his administration was nearing a trade agreement with China, though he did not provide further details. Meanwhile, Goldman Sachs raised its 12-month target for the MSCI China index to 90 from 85, citing higher valuations, a more optimistic outlook for a trade agreement with the U.S., and a stronger yuan. On the economic front, data released over the weekend showed that China’s industrial profits continued to fall in June, with authorities poised to ramp up efforts to curb excessive competition that’s pressuring prices and deepening the impact of U.S. tariffs. Industrial profits fell 4.3% in June from the same period last year, following a 9.1% decline in May, according to the National Bureau of Statistics. Investors await a high-level meeting that is anticipated to occur sometime in the final days of July. The Politburo, China’s top decision-making body, will likely focus on curbing excessive competition and addressing overcapacity, while many analysts view major stimulus as unlikely. In corporate news, AIA Group rose about +5% in Hong Kong after Morgan Stanley boosted its price target on the stock to HK$96.
Japan’s Nikkei 225 Stock Index closed lower today as investors continued to take profits following a recent rally triggered by the country’s trade agreement with the U.S. Bank and technology stocks led the declines on Monday. Investors are also concerned that Japan’s weakened government could give in to opposition demands for tax cuts, straining the country’s already stretched fiscal position. Meanwhile, Japanese Prime Minister Shigeru Ishiba signaled he intended to remain in office despite mounting pressure from within the ruling party for his resignation. “Consensus in the market is for Ishiba to remain in office,” and if he were to announce his resignation, it would be a positive surprise for stock prices, as a change in government would boost the economy, according to Shoji Hirakawa, chief global strategist at Tokai Tokyo Intelligence Lab. Investor focus this week is on the Bank of Japan’s monetary policy decision, where the central bank is expected to keep its benchmark rate unchanged at 0.5%. Governor Kazuo Ueda’s reaction to the U.S. trade deal will be in focus after his deputy stated that the agreement increased the chances of economic projections being met, a key condition for an additional rate hike. Investors will also be focused on corporate earnings, with Fujitsu, Tokyo Electron, and Nissan Motor Co. among the companies scheduled to release their results. In corporate news, Advantest slumped over -8% after UBS downgraded the stock to Sell. Also, Screen Holdings plunged more than -9% after the chip-making equipment maker posted a 12.2% drop in Q1 operating profit. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +3.07% to 22.85.
Pre-Market U.S. Stock Movers
Tesla (TSLA) rose over +1% in pre-market trading after President Trump announced a trade agreement with the EU, where the automaker operates a factory that manufactures hundreds of thousands of Model Y vehicles and millions of battery cells. Also, CEO Elon Musk said that the company entered into a $16.5 billion agreement with Samsung to manufacture next-generation chips.
Lockheed Martin (LMT) and RTX Corp. (RTX) gained more than +1% in pre-market trading after President Trump said the EU agreed to buy “vast amounts” of military equipment under the trade deal.
Nike (NKE) climbed over +3% in pre-market trading after JPMorgan upgraded the stock to Overweight from Neutral with a price target of $93.
Texas Instruments (TXN) advanced more than +1% in pre-market trading after Wolfe Research upgraded the stock to Outperform from Peer Perform with a $230 price target.
Cisco Systems (CSCO) fell over -1% in pre-market trading after Evercore ISI downgraded the stock to In Line from Outperform.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday – July 28th
Welltower (WELL), Waste Management (WM), Cadence Design (CDNS), Enterprise Products Partners (EPD), Hartford (HIG), Brown&Brown (BRO), Nucor (NUE), Fomento Economico Mexicano (FMX), Veralto (VLTO), Cincinnati Financial (CINF), Celestica Inc. (CLS), Principal Financial (PFG), Woodward (WWD), Exelixis (EXEL), Revvity (RVTY), Crane (CR), Universal Health Services (UHS), TFI Intl (TFII), Brixmor Property (BRX), Simpson Manufacturing (SSD), Rambus (RMBS), Rithm Capital (RITM), Ufp Industries (UFPI), Whirlpool (WHR), Sanmina (SANM), Nov (NOV), Amkor (AMKR), Aeroportuario del Centro Norte (OMAB), Ameris (ABCB), Kilroy (KRC), CNO Financial (CNO), Alliance Resource (ARLP), New Gold (NGD), PotlatchDeltic (PCH), COPT Defense Properties (CDP), Western Union (WU), Bank of Hawaii (BOH), Olin (OLN), Curbline Properties (CURB), Enterprise Financial (EFSC), NBT Bancorp (NBTB), Bank of N.T. Butterfield Son (NTB), H2O America (HTO), Two Harbors (TWO), Ultra Cleans (UCTT), Firstsun Capital Bancorp (FSUN), Harmonic (HLIT), Piedmont Office (PDM), Kforce (KFRC), Business First (BFST), Tilray (TLRY), GBank Financial Holdings (GBFH), Beyond (BYON), Bank of Marin (BMRC), Newtek (NEWT), Bankwell (BWFG), Ranger Energy Services (RNGR).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
Shared by Golden State Mint on GoldenStateMint.com
