Week Ahead: US earnings season kicks off
US stocks could launch fresh attempts at new record highs, depending on how the earnings season pans out starting 13 July.
At the time of writing, futures contracts for the Dow are unwinding some of the index’s week-to-date losses, after falling in two of the past 3 sessions.
Besides digesting the latest quarterly performances by US-listed companies, investors and traders will also be eyeing key economic data and Fed speak scheduled for the coming week:
Monday, July 12
- UK PM to announce lifting of most social distancing measures by 19 July?
Tuesday, July 13
- China trade
- Fed speak: Minneapolis Fed President Neel Kashkari, Atlanta Fed President Raphael Bostic, Boston Fed President Eric Rosengren
- US CPI
- US earnings season kicks off
Wednesday, July 14
- Rate decisions: Reserve Bank of New Zealand and Bank of Canada
- Eurozone industrial production
- EIA crude oil inventory report
- US PPI, Fed Beige Book
Thursday, July 15
- Australia unemployment
- China Q2 GDP, retail sales, industrial production
- OPEC monthly oil outlook
- UK unemployment
- US industrial production
- Fed Chair Jerome Powell delivers semi-annual Monetary Policy Report
Friday, July 16
- Bank of Japan policy decision
- Fed speak: New York Fed President John Williams
- US retail sales
Wall Street banks first out of the gates
The likes of JPMorgan and Goldman Sachs will get the earnings ball rolling on Tuesday, followed by the Bank of America, Citigroup, and Wells Fargo on Wednesday. Some key points to look out for when parsing this sector’s earnings have already been outlined in the report from earlier today.
However, going by how banking stocks have been faring of late, what’s evident is that they sure could use a pick-me-up sometime soon.
Banks have gone from darlings of the stock market in the first few months of 2021 to the second-worst performing sector on the S&P 500 since end-May, shedding well over 5% over the past six weeks.
Considering that financial stocks account for nearly 11% of the S&P 500, the market’s reactions to their respective Q2 earnings are set to influence the broader index’s near-term performance.
Noting that the S&P 500 is riding on the back of five consecutive months of gains, positive surprises in the imminent stream of Q2 financial results could help ensure a 6th straight monthly advance for the blue-chip index.
To be sure, the upward trend for the S&P 500 remains very much intact despite some wobbles this week, and the index did record its highest-ever closing price on 7 July.
Still, should any selloff transpire in the immediate term, market participants are expected to give due respect to the S&P 500's 50-day simple moving average as a key support level, barring a material change in the outlook for the US economy and for the earnings of companies that make up this benchmark index.