10 Things to Watch on Friday, July 26
Wall Street braced for a mixed start on Friday, July 26th, after the Federal Reserve’s preferred inflation measure, the core PCE price index, came in as expected. The S&P 500 and Nasdaq were poised for slight gains despite a week of losses, with Wednesday’s tumble marking the worst session since 2022 and highlighting a recent shift away from tech stocks. The week ahead promises a wave of second-quarter earnings from tech giants, potentially bringing volatility to the market. Let’s dive into the key events and reports that investors are keeping their eyes on.
10 Things to Watch on Friday, July 26
Wall Street braced for a mixed start on Friday, July 26th, after the Federal Reserve’s preferred inflation measure, the core PCE price index, came in as expected. The S&P 500 and Nasdaq were poised for slight gains despite a week of losses, with Wednesday’s tumble marking the worst session since 2022 and highlighting a recent shift away from tech stocks. The week ahead promises a wave of second-quarter earnings from tech giants, potentially bringing volatility to the market. Let’s dive into the key events and reports that investors are keeping their eyes on.
Key Takeaways
- Inflation Remains Steady: The core PCE price index for June reflected a 0.2% monthly rise and a 2.6% year-over-year increase, aligning with analysts’ predictions. These figures suggest that inflation is holding steady despite recent economic developments.
- Fed Rate Hikes On Hold: While the PCE data didn’t significantly alter market expectations, investors are still looking for potential Fed interest rate cuts starting in September. However, no immediate action is anticipated at the upcoming central bank meeting.
- Corporate Earnings Spotlight: Friday’s trading saw several companies releasing quarterly earnings reports. Some notable winners included 3M, with strong earnings and an upward revision to its full-year outlook, and Colgate-Palmolive, exceeding expectations with a 9% increase in organic sales.
- Healthcare Sector Challenges: The medical device sector experienced a setback as Dexcom shares plummeted after missing revenue targets and revising its full-year outlook downwards. This decline is attributed to perceived market share losses and operational challenges. Meanwhile, a competitor, Abbott Laboratories, enjoyed a winning streak after posting strong earnings.
- Strong Retail Growth: Deckers Outdoor thrilled investors with a strong quarterly performance, driven by continued popularity of its Hoka and UGG brands. The company also raised its full-year outlook, boosting its stock price.
A Deeper Dive into Friday’s Market Movers:
Earnings Reports: A Mixed Bag
Friday’s earnings season continued to reveal a diverse landscape for companies across various sectors. 3M reported a solid quarter, exceeding expectations on both the top and bottom lines. The company’s Safety & Industrial segment demonstrated growth, while Transportation & Electronics saw a significant increase. Consumer products, however, experienced a slight decline. Nonetheless, 3M remained optimistic, raising its full-year outlook.
In the consumer space, Colgate-Palmolive also delivered positive news, exceeding earnings estimates and reporting impressive organic sales growth of 9%. The company reaffirmed its full-year net sales outlook, forecasting a growth range of 2% to 5%.
The healthcare sector, however, presented a more volatile picture. Dexcom, a leading medical device manufacturer, faced challenges, missing revenue estimates and revising its full-year outlook downwards. The company attributed this shortfall to a combination of factors, including market share losses, execution issues, and other unforeseen challenges. This news sent shockwaves through the market, causing a substantial decline in Dexcom‘s stock price.
Interestingly, Abbott Laboratories, a Dexcom competitor, experienced a winning streak in the wake of its strong earnings report, suggesting potential market share gains in the quarter.
Other Notable Market Moves
Beyond earnings reports, several other companies and events captured investor attention on Friday. Skechers announced a $1 billion stock buyback and raised its full-year guidance, propelling its stock price higher.
In the banking sector, Deutsche Bank upgraded Lockheed Martin to a "buy" rating and increased its price target, citing strong second-quarter results indicating a robust second half of the year. Meanwhile, the bank downgraded L3Harris to "hold" and lowered its price target, expressing concerns about valuation.
The pharmaceutical industry also saw significant developments. The European Union’s (EU) regulatory body rejected Biogen and Eisai’s new Alzheimer’s treatment. Conversely, Novo Nordisk received EU approval for Wegovy to reduce heart risks. Eli Lilly, a competitor in the pharmaceutical space, has drugs targeting both conditions, making it a key player in this dynamic sector.
Looking Ahead: Tech Earnings and Fed’s Influence
The upcoming week is poised to be a pivotal one, with the second wave of megacap tech earnings scheduled to be released. These results will undoubtedly shape market sentiment and potentially trigger volatility.
Furthermore, the Federal Reserve’s monetary policy decision, expected at the next meeting, remains a key focal point. While no immediate action is anticipated, investor focus is on the potential for future interest rate cuts.
The PCE price index data for June, while reflecting expected inflation levels, did not significantly alter market expectations. Nevertheless, the Fed’s future actions and the upcoming tech earnings season will undoubtedly influence market direction in the coming weeks. Traders and investors alike are closely observing these events to gain insights and navigate the evolving market landscape.
