- Between Monday and Friday, the largest companies in the S&P 500 will report their quarterly results, as well as key economic data for the future of shares.
- Investors are watching second quarter GDP, personal consumption expenditures inflation data, the employment cost index, home prices and consumer sentiment.
- Among the companies that will publish their earnings this week are: Apple, Amazon, Meta, Google and Microsoft.
- Why is it the most important week of the year? Because positive numbers from major companies and data that inflation is slowing could determine the start of a bullish rally in the stock market. Otherwise, the indices would continue to sink in the first half of 2022.
This week will be the most important of the year for the stock market. It is that a lot of key news is expected that could determine the future of the actions.
On the one hand, the largest companies in the S&P 500 will report their quarterly results such as: Microsoft and Google (Tuesday), Facebook (Wednesday), and Apple and Amazon (Thursday).
Investors often look at the financials of these giants to understand financially how the market is doing and where it is headed. In addition, there are other crucial economic data such as: Second Quarter GDP, Fed Preferred Personal Consumption Spending Inflation Data, Employment Cost Index, Home Prices, and Consumer Sentiment.
“I think next week will be the biggest week of the summer for economic reports to come out, with regards to GDP, the labor cost index and the Fed meeting, and the 175 S&P 500 companies reporting earnings”
Leo Grohowski, chief investment officer at BNY Mellon Wealth Management.
The investor can write down the following items on his agenda: The gross domestic product for the second quarter is expected on Thursday. The Fed’s preferred personal consumption expenditures inflation data is released on Friday morning, as is the employment cost index. Home prices and new home sales are reported on Tuesday and consumer sentiment is released on Friday.
“I think what those larger companies say about the outlook is going to be more important than the earnings they post. When you combine that with the statistical reports, which will look back, I think it’s going to be a volatile and important week.”
Grohowski added.
On Tuesday and Wednesday, the Fed will determine the increase in interest rates. In that sense, the main economists estimate that the increase will be 75 basic points.
“I think the question is what will happen in September. If the Fed continues to be too tight for too long, we will need to increase our recession probability, which is currently at 60% over the next 12 months,” Grohowski stressed.
GDP estimate
Many projects a contraction that would be the second in a row on top of the 1.6% drop in the first quarter. Two negative quarters in a row, confirming decreases in other data, are perceived as a sign of recession.
“We could have a final recession with the next GDP report. There is a 50/50 chance that the GDP report will be negative. It’s the simple definition of two quarters down in a row.”
Grohowski.
What to expect from the earnings season?
Companies continued to surprise to the upside last week, with 75.5% of S&P 500 earnings better than expected, according to I/B/E/S data from Refinitiv.
As of Friday morning, S&P 500 earnings were still expected to rise 6.2%, based on actual reports and estimates, up from 5.6% a week earlier.
“We have kind of a perfect storm of inputs, pretty deep economic reports across the board, with things that have become important, like consumer confidence and new home sales. For me, the real key will be whether investor sentiment continues to be that the earnings season is better than feared.”
Art Hogan, chief market strategist at National Securities.
Why is it the most important week of the year? Because positive numbers from major companies and data that inflation is slowing could determine the start of a bullish rally in the stock market. Otherwise, the indices would continue to sink in the first half of 2022.
