Market Trends and Expectations
Wall Street and the dollar saw a slight increase on Friday as investors prepared for the week ahead. This upcoming week is packed with significant events, including a Federal Reserve policy meeting, crucial corporate earnings reports, and US President Donald Trump’s August 1 deadline for negotiating trade deals.
Investor Outlook
According to Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York, "Some deals will be done and talks will continue, and Trump may push out the deadline further." He also noted that Trump’s negotiating process typically involves shocking initial announcements, followed by more reasonable discussions regarding tariffs. As a result, all three major indexes (Dow, S&P 500, and Nasdaq) were slightly up in early trading and are on track for weekly gains.
Economic Data and Corporate Results
Gold prices decreased due to a stronger dollar, which drew investors away from the safe-haven metal. Intel’s shares dropped 8.8% after the company forecasted higher-than-expected quarterly losses and announced the halt or cancellation of new factory projects in the US and Europe.
Earnings Reports and Projections
More than a third of the companies in the S&P 500 have released their results, with 80% of them beating estimates, according to LSEG data. Analysts now expect year-on-year second-quarter earnings growth of 7.7%, up from the previously estimated 5.8% as of July 1.
Artificial Intelligence and Megacap Stocks
Four members of the "Magnificent 7" group of Artificial Intelligence-related megacap stocks – Amazon, Apple, Meta, and Microsoft – are scheduled to release their earnings reports next week. Market participants will closely watch these companies’ conference calls for signs that their AI investments are paying off and for any updates on how tariff uncertainties are affecting their forward guidance.
Federal Reserve Meeting and Interest Rates
The Federal Reserve is expected to convene next week for its two-day monetary policy meeting, which will likely result in the federal funds target rate remaining in the 4.25% to 4.50% range. Despite criticism from Trump, who has been pushing for lower interest rates, Fed Chair Jerome Powell is not expected to change the current course. Tim Ghriskey noted, "The idea of lower interest rates should scare us because the Fed has had a huge job of bringing down inflation, and to ease rates at this point is clearly going to be inflationary."
Global Market Trends
The Dow Jones Industrial Average rose 0.25% to 44,806.30, while the S&P 500 and Nasdaq Composite also saw modest gains. European shares gave back some of their previous session’s gains as market participants parsed mixed corporate earnings and awaited developments in US-EU trade negotiations. Emerging market stocks, as well as MSCI’s gauge of global stocks, fell slightly.
Currency and Commodity Markets
The dollar index gained strength but remained on course for its biggest drop in a month. The euro fell 0.2% against the dollar, and the yen also weakened. In the commodity market, gold prices dropped in opposition to the firming dollar, while oil prices softened due to concerns about global demand and a potential supply increase from Venezuela.
Conclusion
The upcoming week promises to be eventful, with significant announcements and meetings that will impact the global economy. As investors navigate these developments, they will be watching closely for any signs of progress in trade negotiations, the impact of corporate earnings reports, and the Federal Reserve’s decision on interest rates. With the current trends and expectations, the market is poised for a potentially volatile week ahead.
