![]() On Friday, traders will monitor the employment cost index, a broad gauge of wages and benefits, along with the personal-consumption expenditures price index - the Fed’s preferred inflation measure - which will help determine if the central bank starts favoring another rate increase at its meeting in September.įor now, what investors know for certain is the earnings outlook keeps getting better. The GDP report is projected to show the economy grew at a 1.8% annual clip last quarter, compared with 2% in the prior reading, a Bloomberg survey shows. “If the most interest-rate sensitive sector is improving, it’s tough to depend on lagged impacts from tightening to justify bearish views.” “The most interest rate-sensitive sector, housing, has already stabilized and is a support for GDP growth (mechanically, given the massive housing drag last year),” DeBusschere wrote in a note. That’s good news for investors awaiting the advance reading of second-quarter gross domestic product this week. US homebuilder sentiment rose in July to the highest level in 13 months. “A downturn tends to catch everyone by surprise because people deny it first by calling it a ‘soft landing’ and then we end up with a recession afterward.”īut to Dennis DeBusschere, founder of 22V Research, signs of strength in housing counter the bears’ argument. “I’m positioned defensively because I still think we are headed for a recession,” said Brian Frank, portfolio manager of the Frank Value Fund, who has suggested that investors buy beaten-down energy and utility stocks. The central bank chief could lean into the chance of an additional hike, a scenario that risks slamming the brakes on growth and upending the bulls.įederal Reserve Chair Jerome Powell speaks after a Federal Open Market Committee meeting, June 14, 2023. Read More: Netflix, Fed Cast Clouds Over Tech-Stock Surge: Earnings WatchĪnd yet Wednesday may prove decisive, with the Fed projected to lift its benchmark rate to a 22-year high, followed by Chair Jerome Powell’s press conference. Around 170 companies in the S&P 500, accounting for some 40% of its market capitalization, are scheduled to report earnings, including bellwethers Microsoft Corp., Meta Platforms Inc. ![]() Investors are bracing for a massive week on two fronts. “If that’s the case, it could end up being the policy mistake that everyone was looking for.” ![]() “The risk is if the Fed feels compelled to reaccelerate the tightening cycle,” said Ed Clissold, chief US strategist at Ned Davis Research. ![]() The danger, of course, is that a resilient labor market pushes policymakers to signal further tightening beyond this week’s expected rate hike, jeopardizing Wall Street’s profit forecasts, especially for the high-flying tech shares that have been key to this year’s advance. ![]()
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