✅ Written by Austin DeNoce, Markets Reporter, Walk-On Holdings

✅ Edited by Casimir Stone, Creative Director Walk-On Holdings

For the Fourth Week In July, the Markets Will Be Watching…

…a couple of reports that will surely factor into the Federal Reserve’s interest rate decision next week and future policy decisions to come.

On Thursday, the highly-anticipated advance estimates of the Q2 Gross Domestic Product (GDP) will come in. This metric gives an expansive look at the growth and strength of the U.S. economy, and as such, plays a key role in helping the central bank determine whether to take a hawkish or dovish stance on interest rate policy. 

Last quarter, the economy grew just 1.4% — well above contraction territory, but a marked decline from the 4.9% and 3.4% readings in Q3 and Q4 2023, respectively. 

To be fair, those results were pleasant surprises, signaling the economy’s ongoing strength despite persistent inflation and multi-decade-high interest rates. But they also gave the Fed confidence to hold rates steady at that historically elevated level. 

Now, with growth moderating, central bankers have more evidence that their efforts to cool the economy are working. In speeches last week, Fed Chair Jerome Powell said inflation is in a “pretty good place,” while Fed Governor Christopher Waller added, “I believe the time to lower the policy rate is drawing closer.” If the Q2 GDP reading comes in cool as well, it might accelerate that timeline even more.

Following the GDP estimates, the Personal Consumption Expenditures (PCE) report for June is due on Friday. This print includes the Core PCE, the Fed’s preferred measure of inflation. In May, the metric registered its softest increase since November 2023, ticking up just 0.1% month-over-month, further contributing to the Fed’s growing confidence. 

The June reading will go a long way toward confirming or casting doubt on market observers’ rate-cut expectations. According to the CME’s FedWatch tool, investors are currently pricing in a 95% chance that the Fed holds rates steady at its July meeting — and a 93.5% they will cut them by 25 basis points at the subsequent meeting in September.

Also on the economic calendar…

Monday, July 22

Steelmaking giant Nucor Corporation (NUE) and Verizon (VZ) will report earnings.

Tuesday, July 23

In economic data, we’ll get the existing home sales for June. The month prior, the median sales price of existing homes climbed to a fresh record high.

It will also be a blockbuster day for earnings, as three of the so-called Magnificent Seven report: Microsoft (MSFT), Google-parent Alphabet (GOOGL), and Tesla (TSLA).

They will be joined by a veritable who’s who of corporate giants: Capitol One (COF), Coca-Cola (KO), Comcast (CMCSA), General Motors (GM), Lockheed Martin (LMT), Marlboro-parent Philip Morris (PM), Sherwin-Williams (SHW), Spotify (SPOT), UPS (UPS), Visa (V), and more.

Wednesday, July 24

Following the previous day’s housing report, more data will roll in, including new home sales and the weekly update on the 30-year mortgage rate.

AT&T (T), Chipotle Mexican Grill (CMG), eBay (EBAY), Ford (F), and O’Reilly Automotive (ORLY) will report earnings.

Thursday, July 25

In addition to GDP estimates, durable goods orders and initial jobless claims will come in.

Reports are also due from pharma giants AbbVie (ABBV) and AstraZeneca (AZN), along with a number of conglomerates and industrial giants, including Honeywell (HON), Northrop Grumman (NOC), Jeep-parent Stellantis (STLA), Pacific Gas & Electric (PCG), Unilever (UL), and Union Pacific (UNP).

Friday, July 26

Finally, in addition to inflation data, the PCE report will shed light on consumer spending and income growth.

In earnings, 3M (MMM), Bristol-Myers Squibb (BMY), Charter Communications (CHTR), Colgate-Palmolive (CL), and ExxonMobil (XOM) will report.