Week Ahead on Wall Street: Inflation and Earnings

Estimated reading time: 5 minutes

Are the Pieces Falling Into Place?

The path to the Federal Reserve lowering interest rates depends on important economic data, such as jobs and inflation, continuing to cool. As of Friday last week, we can check the first item off the list after the June unemployment rate rose, and the number of jobs added in May was revised down.

The second item – inflation – comes into focus again this week, with the latest consumer and wholesale price data set to be released on Thursday and Friday. For the CPI in particular, the consensus is 0.1% m/m and 3.1% y/y, which would be a continuation of the cooling trend. 

While it’s possible that the Fed gains the confidence to cut rates this month if inflation data comes in even lower than expected, Fed officials haven’t really strayed from their stance that several more months of data may be needed before rates can be cut. That means September may be the likelier rate cut bet compared to July.

And as if there weren’t a lot of complicated factors to consider already, investors will also have to contend with the start of earnings season. 

As is usually the case, several household names and big banks will report results to kick things off. They’re often considered a bellwether for the entire earnings season, so these first days are crucial for market sentiment. Even so, we could still get huge surprises that cast the die for the rest of the season.

Economic and Earnings Calendar

Monday

• June New York Fed Survey of Consumer Expectations: This is a measure of peoples’ expectations for inflation, jobs prospects, earnings growth, and more. 
• May Consumer Credit: Borrowing activity gives insight into broader economic activity.

Tuesday

• June NFIB Small Business Optimism: This measures how small business owners feel about current and future economic conditions.
• Fedspeak: Fed Vice Chair for Supervision Michael Barr will discuss financial inclusion. Fed Chair Jerome Powell will testify in front of the Senate Banking and Housing Committee as part of the Semiannual Monetary Policy Report to Congress. Fed Governor Michelle Bowman will discuss financial inclusion, followed by Q&A.

Wednesday

• May Wholesale Inventories and Sales: Wholesalers often operate as an intermediary between manufacturers and retailers, serving as a key part of the goods supply chain.
• Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market.
• Fedspeak: Fed Chair Jerome Powell will continue to testify in front of the House Financial Services Committee as part of the Semiannual Monetary Policy Report to Congress. Chicago Fed President Austan Goolsbee and Fed Governor Michelle Bowman will give opening remarks and participate in a Fed Listens event focused on childcare, working parents, and their employers. Fed Governor Lisa Cook will speak on global inflation and monetary policy challenges.

Thursday

• June Consumer Price Index: The CPI is one of the most popular indicators for tracking consumer price trends and is a marquee release for market watchers. CPI has come down notably from its peak in 2022 but remains somewhat above pre-pandemic levels. 
• June Treasury Statement: This summarizes the U.S. federal government budget by tracking government revenues and expenditures.
• Weekly Jobless Claims: This high frequency labor market data gives insight into filings for unemployment benefits. Jobless claims have continued to show a labor market that remains strong despite having cooled.
• Fedspeak: Atlanta Fed President Raphael Bostic will participate in a moderated discussion on economic inclusion, followed by Q&A. St. Louis Fed President Alberto Musalem will participate in Q&A on the economy and monetary policy.
• Earnings: Conagra Brands (CAG), Delta Air Lines (DAL), PepsiCo (PEP)

Friday

• June Producer Price Index: The PPI tracks price trends that producers face and is down significantly from its peak earlier in the cycle. 
• July University of Michigan Consumer Sentiment: How consumers feel about economic conditions affect their spending habits. This survey places a particular focus on inflation and its trajectory.
• Fedspeak: Chicago Fed President Austan Goolsbee will participate in a fireside chat and Q&A at the Iowa Farm Bureau Economic Summit. Fed Governor Lisa Cook will give a speech on lessons from the American Economic Association Summer program.
• Earnings: Bank of New York Mellon (BK), Citigroup (C), Fastenal (FAST), JPMorgan Chase (JPM), Progressive (PGR), Wells Fargo (WFC)

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