As we embark on a new week in the US market, investors are bracing for a fresh batch of economic data and corporate earnings that could sway sentiment amidst ongoing recession fears. The release of Institute for Supply Management (ISM) Services Purchasing Managers’ Index (PMI) for July and a continuation of Q2 earnings reports this week are therefore critical.
The recent downturn, marked by the downward movement of key stock indices such as the Nasdaq Composite and the S&P 500, has heightened investor anxiety, driven by fears that the Federal Reserve’s prolonged high interest rates might be stifling US economic growth.
Analysts expect a reading around 51 for the latest ISM Services PMI, signaling a return to growth in the services sector, after a contraction to 48.8 in June. Additionally, the final S&P Global Services and Composite PMIs for July can be observed.
The trade balance and consumer credit change for June are also on the investor radar, as they reflect broader economic trends such as consumer spending habits and the country’s international trade position. After expanding to $75f.1 billion in May, the US trade deficit is projected to narrow to $72.9 billion in June. Meanwhile, consumer credit, which saw an increase of $11.35 billion in May, is anticipated to rise by $10 billion in June.
While the equity market has been optimistic about a ‘soft landing’ throughout the year, assigning it a near-certain probability, the actual outcome remains uncertain. Investors are keenly awaiting the speech from San Francisco Fed President Mary Daly for further clues into the Federal Reserve’s policy stance.
Entering a seasonally challenging phase for the equity market, with August typically showing flat performance and September to early October often marked by weakness, the current earnings season is critical.
This week, key earnings reports are anticipated from major players such as CSX Corporation (NASDAQ:CSX), Palantir Technologies Inc (NYSE:PLTR), Amgen Inc (NASDAQ:AMGN), Caterpillar Inc (NYSE:CAT), Uber Technologies Inc (NASDAQ:UBER), Walt Disney Co (NYSE:DIS), Eli Lilly and Co (NYSE:LLY), and Gilead Sciences Inc (NASDAQ:GILD).
Additionally, Apple Inc (NASDAQ:AAPL) will be under scrutiny following Berkshire Hathaway’s notable reduction in its stake in the company.
During times of market unpredictability and shifts, investors’ vigilance is paramount. A continuous assessment of the services sector, trade balance, and consumer credit is essential to gauge the fundamental state of the US economy.
Furthermore, the forthcoming earnings reports from leading corporations will offer valuable insights into the current business climate and prospects for future growth. Keeping abreast of developments and remaining flexible will be key to successfully navigating the evolving market conditions in the upcoming weeks.
Disclaimer: ProsperUs Manager of Content Hailey Chung doesn’t own shares of any mentioned companies.
