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Earnings, the Federal Reserve is the next big catalyst as stocks enter upwards last week

New York Stock Exchange Trader, July 20, 2021.

Source: NYSE

This is one of the biggest market weeks in summer.

First, the Federal Reserve will meet on Tuesday and Wednesday. No action is expected, but it may be mentioned that the central bank may terminate its fixed income program. It could move the market, as the central bank’s tapering of bond purchases is seen as the first step on the road to raising interest rates.

Next, there are about 165 S & P 500 companies that have released revenue reports with the largest technology names. Apple, Microsoft, Amazon, Alphabet And Facebook.. Tesla Report as well as industrial heavy weights Boeing And Caterpillar..There are many consumer names including Procter & Gamble And McDonald’s.

There is also important economic news. The second quarter is expected to be a peak period of post-pandemic growth, with gross domestic product for the second quarter announced Thursday. On Friday, the Fed’s favorite inflation index, the Consumer Expenditure Inflation Index, will be released.

New highs for major indices

The three major US stock indices enter a busy week with new closing prices. The Dow closed over 35,000 for the first time on Friday. The S & P 500 rose 1% to close at 4,411.79, and the Nasdaq Composite index rose 1% to end the day.

“I think revenue will be a show. If the pattern we’ve seen so far continues next week, it will find a market with the least resistance to upwards, and I think that’s good news,” he said.

According to Refinitiv, second-quarter revenue is expected to increase by 78.1%.

“It’s going to be crazy,” Hogan said. “I think the order of magnitude of revenue is still undervalued. I think it will continue next week. 87% of companies are above estimates.”

Earlier in the earnings season, stocks of companies that exceeded expectations did not respond, but now they do, and that should continue, Hogan said. The fact that a few of the largest market cap stocks, such as Apple, Microsoft and Alphabet, report to be very close to each other can have an impact.

“It’s like a Smack of World Series revenue in the middle of summer,” he said.

Stock price rebounds

Investors also monitor the behavior of the market itself. Stock prices ended this week with a solid rise, but Monday’s bruise sale left a mark.Some strategists say It could have been a warning sign of further turmoil in the second half of the quarter.

Stocks took their clues from Treasury yield for 10 yearsThe Covid Delta variant fell on Monday for fear that it could slow global growth. Yields hit a low of 1.12% early Tuesday and then reversed. As the benchmark yield went up, the stock price went up.

For now, the stock seems to be set for more profit. The Dow closed at 35,061.55 last week, up about 1%.The· S & P 500 This week it rose 1.9% and ended at 4,411.79. The Nasdaq has risen 2.8% so far, and the small cap Russell 2000 has risen 2.1%.

Communications services, including Internet names, were the best performing sector in the past week, up 3.2%. Technology was also strong, up 2.8%. Consumer discretion was also the top sector, up 2.9%. The recycling industry and materials were delayed by a slight increase, and energy was slightly lower.

Scott Redler, chief strategy officer at T3Live.com, said Big Tech names such as Apple and Microsoft are already outstripping revenue, so it’s important to see how they’re being traded. I did.

“Some are perfectly priced, others aren’t,” he said. “Microsoft has already hit a record high. It’s a perfect price. It’s interesting to see if Apple can continue to exceed $ 150.” Apple at $ 148.56 per share on Friday. I closed.

Federal Reserve Board “Taper Talk”

Ben Jeffrey, US interest rate strategist at BMO, said Treasury yields could find a catalyst in the Fed. He expects the decade to begin to fall again and says it could reach a low of 1.10%. The decade was 1.28% on Friday afternoon.

Strategists do not expect to see much new in the Federal Reserve Board statement. They are waiting for comments from Federal Reserve Board Chair Jerome Powell on guidance on the move towards reducing the central bank’s quantitative easing program.

The Federal Reserve Board of Governors will announce that it is officially discussing the end of the program long before it actually begins. Many Fed watchers believe that guidance will come in late August, the Jackson Hole Symposium at the Central Bank, or late fall.

“I find it interesting to see how dovish Powell is trying to address the risks of delta variants and their concerns,” Jeffrey said.

Wilmington Trust Chief Economist Luke Tilley doesn’t expect much new from Powell this week. “I’m really targeting Jackson Hole as the most likely candidate for policy and communication points,” he said. “But next week’s meeting can be prepared for that with some statements for economic improvement. They will highlight the new risks of the delta variant, which we point out. Is a risk to think about. “

Delaying the fixed income program is important because it signals that the Fed is finally on the road to reversing its simple policy, including a zero policy rate. According to Tilly, the central bank will probably take a year to complete a $ 120 billion bond purchase a month. That will open the door to rate hikes.

Investors will also monitor GDP in the second quarter to see how powerful the economy is.

According to the latest information from CNBC / Moody’s Analytics, economists survey forecasts that second-quarter growth will grow by an average of 9.7%. It is expected to be at its peak of growth, with an average growth rate of 8.3% in the third quarter.

Tilly said he expects growth in 2021 to grow from 7% to 7.5%.

Calendar one week ahead

Monday

Revenue: Tesla, Lockheed Martin, F5 network, Check Point Software, Hasbro, LVMH, Otis Worldwide, Ameri Prize

New home sale at 10 am

Tuesday

Federal government launches two-day meeting

Revenue: Apple, alphabet, Microsoft, 3M, visa, Advanced Micro Devices, General Electric, Boston Scientific, PulteGroup, Raytheon, JetBlue, Archer Daniels Midland, Chubb, Mondelez, Starbucks, Hawaiian Holdings, Waste Management, Corning, Sherwin-Williams, UPS, Stanley Black & Decker, Teradyne, Cheesecake factory

8:30 am Durable consumer goods

9am FHFA Home Price

9am Case-Shiller Home Price

Consumer confidence at 10am

Wednesday

Revenue: Boeing, Facebook, Pfizer, Ford, Qualcomm, McDonald’s, Bristol Myers Squibb, PayPal, General Dynamics, GlaxoSmithKline, Norfolk Southern, Automatic data, CME Group, Garmin, Moody’s, Steve Madden, Penske Auto Group, Hess, Aflac, Canadian Pacific Railway, Fortune Brands, Samsung

8:30 am Pre-economic indicators

2:00 pm Fed statement

2:30 pm Fed Chair Jerome Powell Briefing

Thursday

Revenue: Amazon, Merck, Comcast, Airbus, Anheiser Bush InBev, MasterCard, Intercontinental Exchange, AstraZeneca, Hilton Worldwide, Northrop Grumman, Altria, Hershey, Yum! Brands, American Tower, Gilead Sciences, Pinterest, Deckers Outdoors, First solar, Beazer Homes, US Steel, Molson Coors Brewing, Southern Co., Tempur Sealy, Textron, Nielsen, Valero Energy, Martin Marietta Materials

8:30 am Unemployment allowance

Second quarter GDP 8:30 am

10:00 am Home sales pending

Friday

Revenue: Caterpillar, Chevron, Exxon mobile, Procter & Gamble, Colgate-Palmolive, AbbVie, Booz Allen, Lazard, Church & Dwight, Johnson Controls, Illinois Tool Works, Cabot Oil & Gas, CBOE Global Market

8:30 am Personal consumption expenditure

8:30 am Employment Cost Index Second Quarter

9 am Fed President James Bullard of St. Louis

9:45 AM Chicago PMI

Consumer sentiment at 10 am

8:30 pm Fed President Lael Brainard

Earnings, the Federal Reserve is the next big catalyst as stocks enter upwards last week

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