Megacap earnings and Fed meeting could test a market on edge next week. Heres whats ahead
There’s no shortage of hurdles the stock market will have to jump in the week ahead. Earnings will kick into high gear next week, with three major hyperscalers — Amazon , Meta Platforms and Microsoft — reporting Wednesday and Thursday after disappointing commentary out of Alphabet this week sank the stock and hurt the broader market as well. Apple will post results next week too, as well as Qualcomm. Investors will keep an eye on the megacaps to see just how much longer the current dynamic — in which the big AI spenders are punished as semiconductor makers are rewarded — can last. On the surface, Alphabet this week delivered solid results, but its spending plans and negative free cash flow spooked investors. Week to date, the Roundhill Magnificent Seven ETF (MAGS) is down more than 5%, while the semiconductor ETFs are higher. “Investors are really scared that these companies are spending all their cash flow on all this AI and data centers and so forth. Nothing left over for shareholders for either buybacks or dividends,” said Ken Mahoney, CEO of Mahoney Asset Management. “And still, in the earnings reports, you don’t hear what’s the return on investment other than conceptual.” “So, for us, the hyperscalers, for some time, we’ve been out of them because that’s a concern,” he added. The deterioration in megacap stocks calls into question the semiconductor trade as well, given that the chip rally hinges on continued AI spending from hyperscalers. Investors remain confident in the outlook for chip stocks, but are wary of the growing risks as more megacaps tumble from their peaks. MAGS YTD mountain Roundhill Magnificent Seven ETF (MAGS), YTD The Federal Reserve makes its latest decision on interest rates on Wednesday, at an uncertain time for the path of monetary policy given the wide dispersion of views on the Street, and within the central bank itself. The consensus view is that the Fed will hike rates, but not until September. But fed funds futures trading is also pricing in a sizable likelihood — 35% — that the central bank will lift its benchmark borrowing rate a quarter percentage point as soon as next week, according to the CME FedWatch tool . Whatever happens in the week ahead may either remove — or add to — the grim mood taking hold in the stock market. Stocks are headed for a losing week Friday, as a resumption of hostilities in the Middle East appears to confirm a growing suspicion among investors that there is no off-ramp in the U.S.-Iran war. Oil is back above $100 a barrel, and the bond market is flashing warning signs that inflation expectations — on both the long and short ends — are on the rise. The major averages are on track to end this month with losses as well, and if that holds true next week, it would be an inauspicious precursor to what is seasonally supposed to be the two worst calendar months of the year, in August and September. Historically, they are the two worst months of the year for the S & P 500, falling 0.4% and 0.8%, respectively, in midterm election years, according to the Stock Trader’s Almanac. To be sure, many investors remain long the equity market. Corporate earnings remain robust, with S & P 500 companies expected to post year-over-year earnings growth rate of 38% in the second quarter, according to FactSet. That’s far more than original expectations. Citigroup global head of macro strategy and asset allocation Dirk Willer remains bullish on stocks, but said that there’s no shortage of potential risks that could change the optimistic case — from a continued escalation in Middle East hostilities to a more hawkish Fed. For the time being, however, he remains hopeful that the market can look past fears that he views as overblown. “The market continues to climb a wall of worry,” Willer wrote recently. Week ahead calendar All times ET. Monday, July 27 8:30 a.m. Durable Orders preliminary (June) Earnings: Cincinnati Financial , Nucor , UDR , Universal Health Services , Welltower , Cadence Design Systems Tuesday, July 28 8:15 a.m. ADP Weekly Employment change (07/18) 8:30 a.m. Wholesale Inventories preliminary (June) 9:00 a.m. FHFA Home Price Index (May) 10:00 a.m. Consumer Confidence (July) Earnings: Royal Caribbean Group , CenterPoint Energy , DTE Energy , Corning , PayPal Holdings , Centene , Hilton Worldwide Holdings , United Parcel Service , Textron , Pentair , The Coca-Cola Co. , Xylem , American Tower , Incyte , IQVIA Holdings , The Sherwin-Williams Co. , The Boeing Co. , Hubbell , Ecolab , Illinois Tool Works , BXP , CoStar Group , Expand Energy , Extra Space Storage , KLA , PPG Industries , Visa , Veralto , Waste Management , Skyworks Solutions , Omnicom Group , Ford Motor , Mondelez International , Seagate Technology , NXP Semiconductors NV , FirstEnergy , Teradyne Wednesday, July 29 2:00 p.m. FOMC Meeting 2:00 p.m. Fed Funds Target Upper Bound Earnings: Boston Scientific , Regency Centers , Amphenol , Biogen , Cognizant Technology Solutions , Flex , Vertiv Holdings , Generac Holdings , Humana , Stanley Black & Decker , GE Healthcare Technologies , Aon , Entergy , Smurfit WestRock , Lennox International , CBRE Group , Johnson Controls International , L3Harris Technologies , General Dynamics , Garmin , Old Dominion Freight Line , Procter & Gamble , Vulcan Materials , Verisk Analytics , Fortive , American Water Works Co. , Invitation Homes , Mid-America Apartment Communities , Meta Platforms , Microsoft , Public Storage , Qualcomm , Starbucks , Tyler Technologies , VICI Properties , Ventas , Align Technology , PTC , Carvana , Equinix , Fortinet , Robinhood Markets , Lam Research , Chipotle Mexican Grill , MGM Resorts International , O’Reilly Automotive Thursday, July 30 8:30 a.m. GDP Chain Price first preliminary (Q2) 8:30 a.m. GDP first preliminary (Q2) 8:30 a.m. Initial Claims (07/25) 8:30 a.m. Core PCE Deflator (June) 8:30 a.m. Personal Consumption Expenditure (June) 8:30 a.m. Personal Income (June) Earnings: Exelon , Mastercard , Martin Marietta Materials , Regeneron Pharmaceuticals , Willis Towers Watson , Xcel Energy , Valero Energy , Air Products & Chemicals , The Cigna Group , Norwegian Cruise Line Holdings , Trane Technologies , Avery Dennison , KKR & Co. , Labcorp Holdings , A. O. Smith , Quanta Services , American Electric Power Co. , Bristol-Myers Squibb , Builders FirstSource , The Hershey Co. , International Paper Co. , Altria Group , Yum! Brands , Baxter International , Huntington Ingalls Industries , EMCOR Group , Intercontinental Exchange , The Southern Co. , Coinbase Global , Camden Property Trust , Corteva , First Solar , GoDaddy , Ingersoll Rand , Alliant Energy , Mettler-Toledo International , Weyerhaeuser , Eversource Energy , Amazon , Monolithic Power Systems , Edison International , Stryker , Live Nation Entertainment , Arthur J. Gallagher & Co , Apple Friday, July 31 8:30 a.m. ECI Civilian Workers (Q2) 9:45 a.m. Chicago PMI (July) 10:00 a.m. Michigan Sentiment final (July) Earnings: Moderna , AbbVie , Federal Realty Investment Trust , LyondellBasell Industries NV , Ares Management , Linde , Chevron , Eaton Corp. , Church & Dwight Co. , Colgate-Palmolive , T. Rowe Price Group , Cboe Global Markets , Dominion Energy , Franklin Resources
