Wall Street’s summer rally is on shaky ground as it heads into one of the busiest weeks of the season.
The S&P 500 and Nasdaq Composite saw their steepest single-day drops since 2022, struggling to regain footing despite a late-week rally. The S&P 500 ended down over 1%, while the Nasdaq slid more than 2.3%. In contrast, the Dow Jones Industrial Average managed a 0.6% gain.
This week, market watchers will be focused on a Federal Reserve meeting, the July jobs report, and earnings from tech giants Apple, Amazon, Microsoft, and Meta. These events will set the tone for August.
Economic updates will include job openings, services and manufacturing activity, and consumer confidence. Additionally, 171 S&P 500 companies are set to report quarterly earnings, with notable names like AMD, Arm, Boeing, McDonald’s, and Starbucks on the docket.
The Fed’s latest monetary policy decision will be announced on Wednesday, with expectations that interest rates will remain unchanged. Investors are eager for clues on when the Fed might cut rates, especially following recent economic data. The core Personal Consumption Expenditures (PCE) index showed its smallest annual increase in over three years, and the Consumer Price Index (CPI) also indicated easing inflation.
Labor market data is another focal point. Job openings have returned to pre-pandemic levels, and the unemployment rate recently hit its highest since November 2021. These indicators have fueled speculation that a rate cut could come as soon as September. Jerome Powell’s press conference on Wednesday will be closely scrutinized for any hints.
“The overall tone from the meeting, including from Chair Powell’s press conference, should signal that a rate cut in September is a reasonable baseline without pre-committing to this action,” Deutsche Bank’s chief US economist Matthew Luzzetti noted.
As the market navigates this critical week, the stakes are high. Will the anticipated earnings and economic data reinforce the rally or foreshadow a downturn? Stay tuned to see how these business dynamics unfold.
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