Earnings, Jobs, and the Fed: Will Markets Rise or Fall This Week?

## Key Takeaways:

* The **S&P 500** and **Nasdaq** faced a challenging week despite a Friday rally.
* **Dow** and **Russell 2000** emerged as winners due to a rotation towards value stocks.
* **Stronger-than-expected economic growth** and **stable inflation data** provide support for a September interest rate cut.
* **Cooling housing market** adds to the case for a rate cut.
* **Earnings season** continues with reports from major companies, including **P&G, AMD, Microsoft, Starbucks, Meta Platforms, Amazon, and Apple**.
* **July employment report** is a key economic data point this week.

## **Earnings Reports: A Mixed Bag with Focus on Key Metrics**

The past week saw a number of major companies release their earnings reports, presenting a mixed bag of results. Here’s a breakdown of notable reports and key metrics to watch:

### **Danaher and Dover Deliver Positive Results**

Life sciences company **Danaher** and industrial firm **Dover** both reported positive earnings, offering a glimmer of hope in an otherwise challenging period for the market.

### **Ford Stumbles, Alphabet Faces Profit-Taking**

**Ford** experienced a significant setback, with its stock plummeting nearly 20% for the week due to disappointing earnings. **Alphabet**, despite posting strong results, faced a sell-off likely driven by profit-taking and concerns around YouTube’s performance.

### **Honeywell Shaves Earnings Outlook**

While **Honeywell** reported an upward revision to its sales guidance, the company was forced to lower its earnings outlook as the demand rebound in short-cycle businesses fell short of expectations.

### **Earnings Season Continues: Key Companies to Watch**

The earnings season is far from over, with a number of high-profile companies scheduled to report in the coming week. These include:

**Monday, July 29:**
* **McDonald’s (MCD):** Investors will be looking for signs of continued strength in the company’s core business and any updates on its price strategy.
* **F5 Networks (FFIV):** Investors will be focused on the company’s outlook for the coming quarter, especially given the recent volatility in the tech sector.

**Tuesday, July 30:**
* **Procter & Gamble (PG):** Investors will be keenly watching the company’s ability to manage inflation and pass on higher prices to consumers. Key metrics to watch include market share gains and volume growth.
* **Stanley Black & Decker (SWK):** Investors will be seeking evidence of progress in the company’s ongoing turnaround efforts, particularly with regard to inventory optimization and supply chain improvements.
* **Advanced Micro Devices (AMD):** Investors will seek updates on the company’s AI accelerator chip strategy and the pace of the PC refresh cycle.
* **Microsoft (MSFT):** Azure cloud growth remains paramount. Investors will be interested in insights into AI investments and their potential impact.
* **Starbucks (SBUX):** Investors will be closely monitoring traffic patterns, hoping for signs of stabilization after a difficult prior quarter.
* **Other key companies reporting:** **SoFi (SOFI), PayPal (PYPL), Pfizer (PFE), BP (BP), JetBlue Airways (JBLU), Merck (MRK), Corning (GLW), Pinterest (PINS), First Solar Inc (FSLR), Caesars Entertainment (CZR), Electronic Arts (EA), Live Nation Entertainment (LYV), Match Group (MTCH).**

**Wednesday, July 31:**
* **GE HealthCare (GEHC):** Key metrics to watch include order rates, backlog, margin expansion, and the impact of stimulus measures in China.
* **DuPont (DD):** The company’s results are expected to be bolstered by the ongoing recovery in the electronics industry.
* **Meta Platforms (META):** Investors will be scrutinizing the company’s cost structure, particularly in relation to its substantial AI investments.
* **Other key companies reporting: Boeing (BA), Norwegian Cruise Line (NCLH), Wingstop (WING), Kraft Heinz (KHC), Mastercard (MA), Teva Pharmaceutical (TEVA), Fiverr (FVRR), Humana (HUM), Vita Coco (COCO), Generac (GNRC), Hess Corp (HES), AutoNation (AN), Arm Holdings (ARM), Qualcomm (QCOM), Carvana (CVNA), Lam Research (LRCX), Western Digital (WDC), Etsy (ETSY), eBay (EBAY), MGM Resorts (MGM).**

**Thursday, August 1:**
* **Eaton (ETN):** The company is expected to continue its streak of strong performance due to robust demand for its electrical equipment.
* **Amazon (AMZN):** Investors will be scrutinizing the company’s logistics costs and its “cost to serve” on the retail side of its business.
* **Apple (AAPL):** While reported results are important, investors will be heavily focused on guidance, particularly in light of the upcoming iPhone 16 launch.
* **Other key companies reporting: Moderna (MRNA), Crocs (CROX), ConocoPhillips (COP), Mobileye Global (MBLY), Wayfair (W), SiriusXM (SIRI), Biogen (BIIB), Canada Goose Holdings (GOOS), Hershey (HSY), Toyota Motor (TM), Dominion Energy (D), Wendy’s (WEN), Roblox (RBLX), Regeneron (REGN), Air Products & Chemicals (APD), Shake Shack (SHAK), Shell (SHEL), Southern Company (SO), WW International (WW), Nextracker (NXT), Coterra Energy (CTRA), Intel (INTC), Coinbase Global (COIN), DraftKings (DKNG), Roku (ROKU), Block (SQ), Cloudflare (NET), Booking Holdings (BKNG), Snap (SNAP), DoorDash (DASH).**

**Friday, August 2:**
* **Linde (LIN):** Investors will be seeking sustained earnings growth, with the Street estimating a 6% increase.
* **Other key companies reporting: Exxon Mobil (XOM), Chevron (CVX), Enbridge (ENB), LyondellBasell Industries (LYB).**

## **Economic Data: A Focus on Employment**

Economic data releases this week will heavily focus on the employment landscape, providing insights into the health of the labor market and potential implications for the Federal Reserve’s monetary policy.

### **July Employment Report: A Key Indicator**

The **July employment report** is due out on Friday, August 2nd, and is considered the most comprehensive measure of employment trends. Key metrics to watch include:

* **Nonfarm payroll additions:** Economists are expecting to see an addition of 160,000 jobs for the month.
* **Unemployment rate:** The consensus forecast is for a 4.1% unemployment rate.
* **Wage inflation:** Economists are expecting to see year-over-year wage inflation of 3.9%.

### **ADP Employment Survey: Tracking Private-Sector Hiring**

The **ADP Employment Survey**, scheduled for Wednesday, July 31st, provides insight into private sector hiring. While it is not always an accurate predictor of the official government employment report, it provides valuable information about hiring trends across various sectors and business sizes. Economists are forecasting a gain of 154,000 jobs in July.

### **JOLTS Report: Gauging Labor Market Tightness**

The **Job Openings and Labor Turnover Survey (JOLTS)**, released on Tuesday, July 30th, provides data on the labor market’s tightness. This report focuses on June data, offering a lagging perspective compared to the ADP and government employment reports.

### **Federal Reserve Meeting: Rate Hike Speculation**

The **Federal Reserve will hold a two-day policy meeting** culminating on Wednesday, July 31st. While a rate cut is not expected this time, the market will be closely listening for any hints from the Fed regarding a potential rate cut in September.

## **A Week of Volatility: Staying Informed**

With a mix of earnings reports, crucial economic data releases, and the Federal Reserve’s rate decision on the horizon, the upcoming week promises to be a volatile one for the stock market. Staying informed and understanding the key metrics driving market sentiment will be crucial for navigating the week’s uncertainties.