Week Ahead on Wall Street: Ready, Fed, Go

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It’s Not What They Do, But What They Say

Eight times a year. That’s how many times the Federal Reserve meets to review monetary policy and decide on what, if any, changes are appropriate. One of those meetings is upon us this week, and as usual investors will pay close attention. Summers used to feel more quiet than this, with workers and market watchers out of the office and trading volumes lighter. 

But in this moment, there are some unique circumstances to be aware of: This is the first Fed meeting where the central bank could realistically lower interest rates since the pandemic given the progress on inflation. Now, that’s not to say that it’s a high chance, after all the market is giving a rate cut a chance of about 5%), but a notable one nevertheless. 

In all likelihood, the Fed will leave interest rates unchanged, as consumer spending and capital expenditures remain healthy, while the second quarter earnings season has been solid. Instead, it’s likelier that the Fed Chairman Jerome Powell might hint at a rate cut after the summer, most likely at the September meeting. 

This matters for investors and consumers alike, since Treasury yields and other debt instruments (e.g. mortgages) not only reflect current short-term interest rates (e.g. the fed funds rate), but also what they will average over a period of time. That means as the period of time gets longer, the current rate matters less and expectations for the future matter more. So even if the Fed doesn’t cut rates this week, a firm indication that they expect to do so soon could cause longer-term interest rates, such as on 30-year mortgages, to move lower.

Of course, the Fed doesn’t operate in a vacuum. If investors have already been anticipating a shift in tone from the Fed and positioned themselves accordingly, interest rates might not move much at all. It’s even possible that longer-term interest rates rise if Fed officials push back on expectations for rate cuts. 

All this will be occurring in a week where not only will several big tech companies report earnings results, but several important labor market data points will drop as well, culminating in Friday’s July jobs report. 

It’s a week for a much needed pulse check for the economy and markets, with no shortage of data points to keep investors on their toes.

Monday

• July Dallas Fed Manufacturing Activity: This is the Dallas Fed’s survey of manufacturing executives in the region on business conditions and their outlook.
• Earnings:  Equity Residential (EQR), F5 Networks (FFIV), Hologic (HOLX), Loews (L), McDonald’s (MCD), ON Semiconductor (ON), PerkinElmer (RVTY), SBA Communications (SBAC), Welltower (WELL)

Tuesday

• May FHFA House Price Index: This is a broad measure of single-family house prices released by the Federal Housing Finance Agency. 
• May S&P CoreLogic Case-Shiller Home Price Index: This is a private sector measure of national home prices. After a period of slight decline in the second half of 2022 and early 2023, the index returned to growth and is now at record highs. 
• June Job Openings: A key measure of business demand for labor is the number of job openings, since reducing openings is easier and preferable to layoffs. 
• July Conference Board Consumer Confidence: How consumers feel about economic conditions affect their spending habits. This survey places a particular focus on job availability and the state of the labor market. 
• July Dallas Fed Non-Manufacturing Activity: This is the Dallas Fed’s survey of services industry executives in the region on business conditions and their outlooks.
• Earnings: Arch Capital Group (ACGL), Archer-Daniels-Midland (ADM), American Electric Power (AEP), Advanced Micro Devices (AMD), American Tower (AMT), Arista Networks (ANET), Boston Properties (BXP), CenterPoint Energy (CNP), Caesars Entertainment (CZR), Electronic Arts (EA), Ecolab (ECL), Essex Property Trust (ESS), Extra Space Storage (EXR), FirstEnergy (FE), First Solar (FSLR), Corning (GLW), Hubbell (HUBB), Howmet Aerospace (HWM), Incyte (INCY), Gartner (IT), Illinois Tool Works (ITW), Leidos Holdings (LDOS), Live Nation Entertainment (LYV), Mondelez International (MDLZ), Merck & Co (MRK), Microsoft (MSFT), Match Group (MTCH), Public Service Enterprise Group (PEG), Pfizer (PFE), Procter & Gamble (PG), Public Storage (PSA), Phillips 66 (PSX), PayPal (PYPL), Qorvo (QRVO), Starbucks (SBUX), S&P Global (SPGI), Smurfit WestRock (SW), Stanley Black & Decker (SWK), Skyworks Solutions (SWKS), Stryker (SYK), Sysco (SYY), UDR (UDR), Xylem (XYL), Zebra Technologies (ZBRA)

Wednesday

• July ADP Employment Report: This survey, usually released a day or two before the official government jobs report, offers insight into private sector employment trends. 
• 2Q Employment Cost Index: This is the most comprehensive measure of worker compensation, including wages, bonuses, benefits and more. 
• FOMC Interest Rate Decision: The Federal Reserve will announce any changes to monetary policy after the conclusion of its two-day FOMC meeting, in addition to providing commentary on the economy. It’s one of eight regularly scheduled meetings per year.
• Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market.
• Earnings: Automatic Data Processing (ADP), Aflac (AFL), American International Group (AIG), Albemarle (ALB), Allstate (ALL), ANSYS (ANSS), APA Corp (APA), AvalonBay Communities (AVB), American Water Works (AWK), Boeing (BA), Bunge Global S.A. (BG), BorgWarner (BWA), CDW (CDW), CH Robinson Worldwide (CHRW), AmerisourceBergen (COR), Cognizant Technology Solutions (CTSH), Corteva (CTVA), Dayforce Inc (DAY), DuPont de Nemours (DD), eBay (EBAY), Everest RE Group (EG), Eversource Energy (ES), Etsy (ETSY), Fair Isaac (FICO), FMC (FMC), GE HealthCare Technologies Inc (GEHC), Generac Holdings (GNRC), Garmin (GRMN), Hess (HES), Host Hotels & Resorts (HST), Humana (HUM), IDEX (IEX), Ingersoll Rand (IR), Johnson Controls International (JCI), Kraft Heinz (KHC), KKR & Co (KKR), Lam Research (LRCX), Mastercard (MA), Mid-America Apartment Communities (MAA), Marriott International (MAR), MetLife (MET), Meta Platforms, Inc. (META), MGM Resorts International (MGM), Altria Group (MO), Norwegian Cruise Line Holdings (NCLH), Paycom Software (PAYC), PTC (PTC), Qualcomm (QCOM), T-Mobile US (TMUS), Trane Technologies (TT), Vici Properties (VICI), Verisk Analytics (VRSK), Waters (WAT), Western Digital (WDC), WEC Energy Group (WEC).

Thursday

• July Challenger Job Cuts: The firm Challenger, Gray & Christmas tracks the number of layoff announcements each month by sector. 
• 2Q Productivity and Unit Labor Costs: These measures provide a breakdown of how productive workers were per hour of work and at what cost. 
• June Construction Spending: Construction data is a leading indicator of business activity. 
• July ISM Manufacturing PMI: This index from the Institute for Supply Management tracks how purchasing managers across the manufacturing sector feel about the business environment. 
• July Wards Total Vehicle Sales: Cars are a big ticket item for consumers, so underlying vehicle sales trends can help shine a light on demand for durable goods.
• 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.
• Earnings: Apple (AAPL), Ameren (AEE), AES (AES), Ametek (AME), Amazon (AMZN), Air Products and Chemicals (APD), Aptiv (APTV), Ball (BALL), Becton Dickinson and Company (BDX), Biogen (BIIB), Bio-Rad Laboratories (BIO), Booking Holdings (BKNG), Celanese (CE), Cigna (CI), Clorox (CLX), Cummins (CMI), ConocoPhillips (COP), Camden Property Trust (CPT), Coterra Energy Inc (CTRA), Dominion Energy (D), Consolidated Edison (ED), EOG Resources (EOG), Eaton Corp (ETN), Entergy (ETR), Exelon (EXC), Federal Realty Investment Trust (FRT), GoDaddy (GDDY), NortonLifeLock (GEN), WW Grainger (GWW), Huntington Ingalls Industries (HII), Hershey (HSY), Intercontinental Exchange (ICE), Intel (INTC), Iron Mountain (IRM), Kellogg (K), Kimco Realty (KIM), Laboratory of America Holdings (LH), Alliant Energy (LNT), Microchip Technology (MCHP), Monolithic Power Systems (MPWR), Moderna (MRNA), Motorola Solutions (MSI), Mettler-Toledo International (MTD), Pinnacle West Capital (PNW), Prudential Financial (PRU), Quanta Services (PWR), Regency Centers (REG), Regeneron Pharmaceuticals (REGN), ResMed (RMD), Southern Company (SO), Teleflex (TFX), Targa Resources (TRGP), Vertex Pharmaceuticals (VRTX), Ventas (VTR), Xcel Energy (XEL)

Friday

• July Employment Situation Summary: This monthly blockbuster release from the Labor Department gives a comprehensive look at employment, wages, and hours worked in the previous month. 
• June Factory and Durable Goods Orders: These metrics give insight into underlying trends for leading cyclical indicators.
• Earnings: Cboe Global Markets (CBOE), Church & Dwight (CHD), Chevron (CVX), Linde PLC (LIN), LyondellBasell Industries (LYB), Monster Beverage (MNST), PPL (PPL), Exxon Mobil (XOM)

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