Buckle Up for a Pivotal Week on Wall Street
It's shaping up to be a crucible week for markets, with major economic data releases, Fed speeches, and the start of earnings season. The next few days could play a big role in determining if the Fed cuts rates at its next meeting in September.
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All eyes will be on Thursday's inflation report for June. Economists expect the Consumer Price Index rose 3.1% over last year, slowing from May's already cooled 3.3% pace. If inflation continues moderating towards the Fed's 2% target, it would strengthen the case for a September rate cut.
Fed Chair Jerome Powell will also have a prime opportunity to guide market expectations in his semiannual testimony to Congress on Tuesday and Wednesday. Powell remarked last week that recent inflation readings "suggest we are getting back on a disinflationary path." Any hints at an upcoming rate cut could move markets.
On the corporate front, earnings season kicks off in earnest on Friday with reports from big banks like JPMorgan, Wells Fargo, and Citigroup. With the S&P 500 near records, stocks may struggle for big post-earnings pops unless results truly blow away lofty expectations.
The week also features fresh jobs data and the all-important read on consumer sentiment. Put it all together, and we could see fireworks in equity markets and renewed volatility across asset classes depending on the news flow.
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Here's the key economic calendar:
• Monday: NY Fed inflation expectations
• Tuesday: NFIB small business optimism; Powell Senate testimony
• Wednesday: Powell House testimony
• Thursday: CPI; real earnings; jobless claims
• Friday: PPI; Michigan consumer sentiment; bank earnings
So make sure to buckle up - we could be in for a very bumpy ride over the next few days. A strong inflation print and hawkish Fed rhetoric could dash rate cut hopes, while hot earnings could propel stocks higher or flop if they disappoint. Stay tuned!
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