Key Economic Data and Major Earnings Reports: What to Watch This Week

Economic Data Releases

This week brings a plethora of important economic data releases that will provide insights into the health of the U.S. economy. From inflation metrics to GDP figures, investors and analysts will be closely watching these reports for clues about the direction of monetary policy and economic growth.

Chicago Fed National Activity Index

On Monday, the Chicago Fed National Activity Index for June will be released at 8:30 a.m. This metric reached a 3-month high in May 2024, hitting 0.8. Expectations are for a further increase to 0.3 for June, potentially signaling continued economic expansion.

Existing Home Sales

Tuesday brings existing home sales data for June at 10:00 a.m. Analysts anticipate 2.45 million home sales in June, a slight uptick from the 4-month low of 4.11 million recorded in May. The month-over-month change in existing home sales will also be closely monitored for trends in the housing market.

Manufacturing and Services PMI

On Wednesday at 9:45 a.m., the flash prints for S&P Global composite manufacturing and services PMI for July will be released. These indices provide valuable insights into the current state of both the manufacturing and services sectors of the economy.

New Home Sales

Also on Wednesday, at 10:00 a.m., new home sales data for June will be published. This metric experienced a significant drop of 11.3% in May, reaching a 6-month low of 69,000 homes. The June figures will be closely watched for any signs of recovery in the housing market.

GDP Growth Rate

Thursday brings one of the week's most anticipated releases - the advanced quarterly GDP growth rate for Q2. The U.S. economy grew by 1.4% in Q1 2024, and the first Q2 print is expected to show growth of 1.5%. This data will be crucial in assessing the overall health of the economy and could influence market sentiment.

Durable Goods Orders

Also on Thursday, durable goods orders for June will be released. Analysts expect the metric to rise by 2.1% on a month-over-month basis, significantly higher than the 0.1% increase seen in May. This data provides insights into manufacturing activity and business investment.

PCE Inflation Data

Friday brings another critical release - the Personal Consumption Expenditures (PCE) data for June. The PCE index, which is the Federal Reserve's preferred inflation gauge, is expected to remain flat on a month-over-month basis and rise by 2.5% year-over-year. The previous year-over-year PCE for May dropped to 2.6% from 2.7% in April, so markets will be watching to see if this gradual easing continues.

Michigan Consumer Sentiment

The week concludes with the final Michigan Consumer Sentiment print for July. The preliminary print came in at 66, below the consensus of 68.2 and the lowest level since November 2023. The final print will be closely watched for any revisions or changes in consumer outlook.

Major Earnings Reports

This week is packed with earnings reports from major companies across various sectors. These reports will provide valuable insights into corporate performance and economic conditions.

Monday

• Verizon: The telecommunications giant reports before market open.
• Cleveland Cliffs: The mining and steel company reports after market close.
• SAP: The German multinational software corporation reports after hours.
• NXP Semiconductors: The Dutch semiconductor manufacturer reports post-market.

Tuesday

• Spotify: The music streaming leader reports before market open. Analysts expect revenue of $4.07 billion.
• GE Aerospace: The aviation technology company reports in the morning.
• UPS: The global shipping and logistics company releases earnings.
• General Motors: The automaker's report will provide insights into the auto industry.
• Comcast: The media and technology company's earnings are due.
• Coca-Cola: Warren Buffett's favorite beverage company reports.
• Tesla: The electric vehicle manufacturer reports after market close. Analysts expect revenue of $25.1 billion.
• Alphabet: Google's parent company reports post-market. Revenue estimates stand at $72.55 billion.
• Visa: The payment technology company releases earnings after hours.
• Texas Instruments: The semiconductor company's report is due after the bell.
• Capital One Financial: The financial services company reports post-market.

Wednesday

• AT&T: The telecommunications company reports in the morning. Analysts expect revenue of $30.39 billion.
• IBM: The technology and consulting company reports after market close.
• Ford Motor Company: The automaker's earnings are due post-market.
• ServiceNow: The cloud computing company reports after hours.
• Chipotle: The fast-casual restaurant chain reports its first earnings since its stock split.

Thursday

• American Airlines: The airline reports before market open. Analysts expect revenue of $14.49 billion.
• Southwest Airlines: Another major airline reporting in the morning.
• AbbVie: The biopharmaceutical company's earnings are due.
• AstraZeneca: The pharmaceutical giant reports.

Friday

• Bristol Myers Squibb: The pharmaceutical company reports in the morning.
• 3M: The multinational conglomerate's earnings are due.
• Charter Communications: The telecommunications and media company reports.

Sector-Specific Earnings Watch

Technology Sector

The technology sector will be in focus this week with reports from several major players:

• Alphabet: Google's parent company will be closely watched for its performance in advertising, cloud services, and AI investments. The company's recent Google I/O event and reported talks of a $23 billion acquisition deal with Anthropic add intrigue to this report.

• Tesla: After a volatile period that saw a rally on higher Q2 deliveries followed by a sharp drop on reports of delayed Robotaxi unveiling, Tesla's earnings will be crucial. Investors will be looking for updates on new model timelines and progress in autonomous driving technology.

• IBM: The legacy tech giant's report will provide insights into enterprise IT spending and cloud adoption trends.

• SAP: As a major player in enterprise software, SAP's results will offer a perspective on global business technology investments.

• NXP Semiconductors: This report could influence sentiment in the broader semiconductor industry.

Communication Services

Several key players in the communication services sector are reporting this week:

• Verizon: The telecom giant's report will shed light on trends in mobile subscriptions and 5G adoption.

• AT&T: Coming off a recent data breach affecting 110 million customers, AT&T's report will be closely scrutinized for any impact on its business and customer trust.

• Comcast: As a major player in both media and broadband, Comcast's results will provide insights into cord-cutting trends and internet service demand.

• Charter Communications: Another key player in the cable and internet service industry reporting this week.

Consumer Discretionary

The consumer discretionary sector will see reports from companies across various industries:

• Spotify: The music streaming leader's report will be watched for user growth metrics and progress in podcast monetization.

• General Motors: GM's results will offer insights into auto demand, electric vehicle adoption, and supply chain challenges.

• Ford Motor Company: Another major automaker reporting, providing a comprehensive view of the auto industry.

• Chipotle: The fast-casual restaurant chain's first report since its stock split will be closely watched, especially given recent concerns about portion sizes.

Industrials

Several industrial sector companies are reporting this week:

• UPS: The shipping giant's results will provide insights into global trade volumes and e-commerce trends.

• GE Aerospace: As a major player in aviation technology, GE Aerospace's report will offer a perspective on the recovery in the aerospace industry.

• 3M: The diversified industrial company's results will provide a broad view of industrial and consumer product demand.

Financial Services

The financial services sector will see reports from:

• Visa: The payment technology company's results will offer insights into consumer spending trends and the shift to digital payments.

• Capital One Financial: This report will provide a view into consumer credit trends and the health of the banking sector.

Healthcare

Several major healthcare companies are reporting:

• AbbVie: The biopharmaceutical company's results will offer insights into drug pricing trends and new product pipelines.

• AstraZeneca: Another major pharmaceutical company reporting, providing a global perspective on healthcare trends.

• Bristol Myers Squibb: This report will add to the picture of the pharmaceutical industry's performance.

Market Implications

The combination of crucial economic data releases and major earnings reports makes this week particularly significant for financial markets. Here's how different aspects could impact market sentiment:

Economic Data Impact

1. GDP Growth: The advanced Q2 GDP print will be a key driver of market sentiment. A stronger-than-expected figure could boost confidence in the economy's resilience, potentially supporting equity markets. Conversely, a weaker print might raise concerns about economic slowdown.

2. Inflation Metrics: The PCE data, being the Fed's preferred inflation gauge, will be crucial. If inflation continues to ease, it could reinforce expectations of a less hawkish Federal Reserve, potentially benefiting both equity and bond markets.

3. Housing Market Data: With both existing and new home sales data due, the health of the housing market will be in focus. Strong numbers could boost homebuilder stocks and related sectors, while weak data might raise concerns about the impact of higher interest rates.

4. Consumer Sentiment: The final Michigan Consumer Sentiment print will provide insights into consumer outlook. A positive surprise could boost consumer discretionary stocks, while a negative print might lead to caution in these sectors.

Earnings Impact

1. Technology Sector: Reports from Alphabet, Tesla, and others will be crucial for tech stock performance. Strong results and positive guidance could drive the sector higher, potentially lifting the broader market given tech's significant weighting in major indices.

2. Consumer Discretionary: Results from companies like GM, Ford, and Chipotle will provide insights into consumer spending trends. Strong reports could boost sentiment towards consumer-focused stocks.

3. Financial Services: Visa's results will offer a view into consumer spending and credit trends, which could impact sentiment towards the broader financial sector.

4. Healthcare: Reports from major pharmaceutical companies could influence the healthcare sector, which is often seen as a defensive play during uncertain economic times.

5. Industrial and Transportation: Results from UPS, airlines, and industrial companies will provide insights into global trade and economic activity levels.

Broader Market Considerations

1. Earnings Season Momentum: As we enter the heart of earnings season, the overall trend in results and guidance will be crucial for market direction. Strong reports could fuel further gains, while disappointments might lead to increased volatility.

2. Sector Rotation: Depending on the mix of economic data and earnings results, we could see significant sector rotation. For example, strong inflation data might benefit value stocks over growth, while weak economic data could drive investors towards defensive sectors.

3. Fed Policy Expectations: The combination of economic data (especially inflation and GDP figures) and corporate outlooks will influence expectations for future Federal Reserve policy. This, in turn, could impact bond yields and equity valuations.

4. Global Considerations: While the focus is on U.S. data and earnings, reports from multinational companies will provide insights into global economic conditions, potentially influencing sentiment towards international investments.

Conclusion

This week presents a packed calendar of economic data releases and corporate earnings reports that will be crucial in shaping market sentiment and potentially driving significant moves across various asset classes. Investors and analysts will be closely monitoring these events for insights into economic health, corporate performance, and potential shifts in monetary policy expectations.

Key areas to watch include:

• The advanced Q2 GDP print for signs of economic resilience or slowdown
• PCE inflation data for indications of continued easing in price pressures
• Housing market data for the impact of higher interest rates on this crucial sector
• Tech sector earnings, particularly from giants like Alphabet and Tesla, for insights into innovation and growth trends
• Consumer-focused companies' results for indications of spending patterns and economic confidence
• Industrial and transportation sector reports for clues about global trade and economic activity levels

As always, it's important for investors to consider these events in the context of their overall investment strategy and risk tolerance. While individual data points or earnings reports can cause short-term market movements, it's the broader trends and their implications for long-term economic and corporate performance that typically drive sustainable market directions.

Stay informed, remain vigilant, and be prepared for potential market volatility as these crucial economic indicators and corporate results unfold throughout the week.

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