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

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

As We Head Into August Next Week, the Markets Will Be Watching…

…the Federal Reserve’s latest policy decision, due at the end of the Federal Open Market Committee’s (FOMC) latest meeting on Wednesday, July 31. 

The central bank has held the federal funds rate steady at a multidecade high for more than a year now. Unfortunately for consumers feeling the pinch from these consistently elevated interest rates, that likely isn’t going to change this week. Markets are pricing in just a 5% chance of a rate cut at the July FOMC meeting, per the CME FedWatch tool. 

But flash forward to the next meeting, and it’s a different story. Investors now unanimously expect at least one rate cut by September. At the time of writing, nearly 88% of market observers expect the federal funds rate to fall by 25 basis points (bps), while another 12% expect a cut of 50 bps or more. 

This bullish sentiment was buoyed last week by the initial estimates of the U.S. gross domestic product (GDP) and the release of the Personal Consumption Expenditures (PCE) for June. The former, a broad measure of U.S. economic growth, came in well above expectations at an annualized rate of 2.8%. Meanwhile, core PCE — the Fed’s most closely watched inflation gauge — ticked up just 0.2% month-over-month and held steady at 2.6% year-over-year. 

The mild inflation combined with resilient economic growth should go a long way toward confirming those forecasts, as will the inevitable comments from Fed officials following the meeting. 

And who knows? Maybe July isn’t too early for the first cut after all. 5% is better than 0%.

Also on the economic calendar…

Monday, July 29

The Dallas Fed’s measure of manufacturing activity in Texas.

Plus, McDonald’s (MCD) and ON Semiconductor Corporation (ON) will hand in report cards.

Tuesday, July 30

JOLTS Job Openings and the Conference Board’s consumer sentiment survey.

It will be a blockbuster day of earnings, headlined by the oft-largest company in the world by market cap, Microsoft (MSFT). The tech giant will be joined by the likes of AMD (AMD), Electronic Arts (EA), Merck & Company (MRK), Pfizer (PFE), Procter & Gamble (PG), Starbucks (SBUX), and more.

Wednesday, July 31

In addition to the Fed’s interest rate decision, we’ll get the weekly update to the 30-year mortgage rate.

In earnings, Arm Holdings (ARM), Boeing (BA), Mastercard (MA), Meta Platforms (META), Qualcomm (QCOM), and more will report.

Thursday, August 1

The ISM Manufacturing PMI, along with more tech giant earnings. Apple (AAPL) and Amazon (AMZN) will headline earnings, joined by Intel (INTC), Shell (SHEL), and Toyota (TM).

Friday, August 2

The nonfarm payroll report.

Oil giants Chevron (CVX) and ExxonMobil (XOM) will hand in report cards as well.