It might be mid-summer, but this is a very busy few days for the stock market and the economy.
Here are just a few things happening between today and Friday, with some insights of the significance of each.
- Roughly 170 companies from the S&P 500 Index report their latest financial performance for the second quarter, which ended on June 30. Among those are big tech companies Alphabet (GOOGL) and Microsoft (MSFT) today, Meta Platforms (META) tomorrow, and Apple (AAPL) and Amazon (AMZN) on Thursday.
- The Federal Reserve will announce tomorrow about interest rates, with the consensus of another 75-basis-point increase, bringing the Fed Funds rate from about 1.75% to 2.5%.
- On Thursday is the report of second-quarter gross domestic product (GDP), which is widely expected to show a slowing economy. If it does in fact show a second consecutive quarter of shrinkage many will start saying we are in a recession.
Earnings The tech companies make up a huge amount of valuation of the overall S&P 500. How they go so goes the market, to some degree. SNAP (Snapchat) last week reported dismal earnings, so how Google and Meta (Facebook) report this week will give a fuller picture of online advertising.
Demand for PCs and smartphones skyrocketed during the pandemic and now seems to be slowing as consumers are not in need of upgrades, so the results from Microsoft and Apple will reflect that.
And of course to see if general business activity is slowing will show up in the earnings reports of Microsoft and Amazon, in particular, in terms of cloud computing and general e-commerce.
Federal Reserve The Fed interest-rate reveal will likely be a non-event, assuming the 75-basis-point hike is what Fed Chair Jerome Powell announces. The Fed is expected to follow this fairly aggressive rate-hike path in order to slow corporate borrowing, which in turn will slow growth, ultimately taming the red-hot inflation we have been experiencing over the last year.
U.S. GDP And the slowing GDP will indeed make clear that the economy is slowing, partly because it’s been growing so rapidly and because inflation is hindering consumer spending. Generally speaking, economists are looking for slower growth to help tame inflation even though it’s not great for profits and employment.
