Wall Street’s Triple Threat: The Fed, Big Tech, and Inflation Collide

Markets brace for a monumental week as a pivotal Federal Reserve decision collides with a flood of Big Tech earnings and critical economic data.

In this edition, we dive into:

• The Fed’s Crossroads: Why the upcoming FOMC meeting is about the message, not the decision, and what it means for interest rates.
• Earnings Deluge: A look at the mega-cap tech earnings that could make or break the market’s momentum.
• Inflation & Growth on Trial: The critical GDP and PCE data releases that will give the clearest picture of the U.S. economy.
• S&P 500 & Bitcoin: Technical Take: Expert analysis on what the charts are saying for the benchmark stock index and the world’s leading crypto-asset.
• Beyond the Headlines: Decoding the major news impacting your investments this week.

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Market Summary: The Week That Was (July 21-25)

Last week, U.S. equities treaded water as investors digested the first major wave of Q2 earnings reports against a backdrop of persistent inflation concerns. The S&P 500 managed a slight gain of approximately 0.6%, while the Nasdaq Composite outperformed with a 1.5% rise, both indices setting new record highs early in the week before trading turned cautious. The Dow Jones Industrial Average lagged, finishing the week nearly unchanged.

The market’s initial optimism was fueled by strong results from companies like Verizon and several industrial names, suggesting underlying corporate health. However, that sentiment was tempered by a Consumer Price Index (CPI) report that showed inflation remains stickier than hoped. This data point shifted focus squarely to the upcoming Federal Reserve meeting, leaving the market in a holding pattern as investors awaited more definitive clues on monetary policy. Volume thinned out late in the week, indicating a broad reluctance to take on significant new positions ahead of this week’s storm of catalysts.

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Upcoming Notable Earnings (July 28 – August 1)

This week represents the heart of the Q2 earnings season, with a heavy concentration of the market’s most influential technology and industrial giants. Forward guidance on costs and consumer demand will be paramount.

• Tuesday, July 29:
  • Boeing (BA)
  • Procter & Gamble (PG)
  • UnitedHealth Group (UNH)
  • Visa (V)
  • Starbucks (SBUX)
• Wednesday, July 30:
  • Ford (F)
  • Meta Platforms (META)
  • Microsoft (MSFT)
  • Qualcomm (QCOM)
  • ADP (ADP)
• Thursday, July 31:
  • Apple (AAPL)
  • Amazon (AMZN)
  • Mastercard (MA)
  • AbbVie (ABBV)
  • Coinbase (COIN)
• Friday, August 1:
  • Exxon Mobil (XOM)
  • Chevron (CVX)
  • Moderna (MRNA)

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Upcoming Important Economic Data (July 28 – August 1)

The economic calendar is dense, with releases that will directly influence the Federal Reserve’s policy outlook.

• Tuesday, July 29:
  • US: S&P/Case-Shiller Home Price Index (May), Consumer Confidence (July)
• Wednesday, July 30:
  • US: Advance Q2 Gross Domestic Product (GDP), FOMC Interest Rate Decision & Press Conference
• Thursday, July 31:
  • US: Personal Consumption Expenditures (PCE) Price Index (June), Initial Jobless Claims
  • Euro Area: Flash CPI (July), Q2 GDP
• Friday, August 1:
  • US: Non-Farm Payrolls (July), Unemployment Rate (July)

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Technical Analysis

S&P 500: The S&P 500 continues to hover near all-time highs, but momentum has slowed, forming a tight consolidation pattern. The index remains above its key moving averages (50-day and 200-day), signaling a healthy long-term uptrend. However, the Relative Strength Index (RSI) is showing a slight bearish divergence, where price makes a new high but the indicator does not, suggesting waning buying pressure. The market is coiled tightly ahead of the week’s news. A dovish Fed and strong earnings could trigger a breakout to new highs, while a hawkish stance could see the index test support near the 5,650 level, followed by the 50-day moving average around 5,580.

Bitcoin (BTC): After a powerful surge earlier in the month, Bitcoin has entered a consolidation phase, trading within a range between roughly $115,000 and $122,000. This sideways movement is typical as the market digests significant gains and awaits a new catalyst. The $115,000 level is acting as a strong psychological and technical support, aligning with its 50-day moving average. Resistance is clearly defined at the recent high near $122,000. A “risk-on” reaction to the Fed’s announcement could provide the fuel needed to break this resistance and target the $130,000 level. Conversely, a hawkish, “risk-off” environment could see BTC break support and test the $110,000 zone.

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Major News Headlines Impacting Markets This Week

This week’s narrative will be driven by three interconnected forces. First and foremost is the Federal Reserve’s policy statement and press conference on Wednesday. With a rate hold fully priced in, the market will dissect every word for signals on future policy. Any deviation from the current “data-dependent” message could trigger massive moves in bonds, currencies, and equities.

Second, the market’s largest constituents report their earnings. Results from Apple, Microsoft, and Amazon will be a referendum on the health of the consumer and the technology sector that has powered this year’s rally. Weak guidance from any of these giants could undermine market confidence, regardless of what the Fed says.

Finally, the hard data from the Q2 GDP and June PCE reports will provide the ultimate reality check. This data will either validate or contradict the Fed’s policy stance and corporate outlooks. A combination of weak growth and hot inflation would be the worst-case scenario for markets, creating fears of stagflation.

From Glideslope’s Pulse AI:

Investors should keep an eye on the following headlines for the coming week:

1. **Earnings Season Continuation**: As the reporting season continues, investors should watch out for the results of the ‘Magnificent 7’ which includes key tech giants and influential market players. These results could significantly impact market sentiments and stock movements. Read more

2. **Zillow’s Performance in a Frozen Housing Market**: Despite a generally sluggish housing market, Zillow’s growth indicators can provide insights into potential market resilience or recovery, sparking interest among real estate and tech investors. Read more

3. **Political Moves in Redistricting**: Developments in political strategies in states like California, New York, and Maryland could have implications on state-specific policies and potentially influence regional economic conditions. Investors should monitor these shifts for impacts on local businesses and the broader economic landscape. Read more

4. **FDA Regulatory Changes and the MAHA Agenda**: Any new guidelines or discussions by the FDA, particularly those addressing food dyes and ultra-processed foods under the MAHA agenda, could affect companies in the food and beverage sectors. Read more

5. **Government’s Role in Investments Under Trump’s Administration**: With the government increasing its investment activities, sectors that could benefit from these investments may see varying degrees of stock volatility and interest. This is crucial for investors focusing on sectors likely to be impacted by government spending or regulation. Read more

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