Fedspeak And Earnings Ramp Up Amid Bull Market Vibes

Summary:

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Key economic releases in the week ahead include updates on retail sales and industrial production, which are expected to give economists a better idea of the growth trajectory in the U.S. Those economic releases will be sandwiched in between a full slate of Federal Reserve speakers just ahead of the pre-FOMC meeting blackout period. At the time of publication, federal funds futures trading implied only a 7% probability of a rate cut at the July 31 meeting, but the implied probability of a rate cut at the September meeting or before has soared to 93%. Across the Pacific Ocean, the Chinese Communist Party’s Third Plenum political meeting will be watched for any sector-rattling policy and reform changes.

The earnings season picks up quite a bit, with ASML (ASML) (preview), Taiwan Semi (TSM) (analysis), Bank of America (BAC) (preview), Netflix (NASDAQ:NFLX) (analysis), and American Express (AXP) (analysis) some of the key reports that analysts have circled.

Earnings spotlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (BLK). See the full earnings calendar.

Earnings spotlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (MS), PNC Financial (PNC), and J.B. Hunt Transport (JBHT). See the full earnings calendar.

Earnings spotlight: Wednesday, July 17 – Johnson & Johnson (JNJ), U.S. Bancorp (USB), Kinder Morgan (KMI), United Airlines (UAL), and Ally Financial (ALLY). See the full earnings calendar.

Earnings spotlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Blackstone (BX), Domino’s Pizza (DPZ), and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.

Earnings spotlight: Friday, July 19 – American Express (AXP), Halliburton (HAL), and Travelers (TRV) See the full earnings calendar.

Volatility watch: Options trading volume is elevated on Cipher Mining (CIFR) and SoundHound AI (SOUN). The most overbought stocks per their 14-day relative strength index include Zapp Electric Vehicles Group (ZAPP), Tesla (TSLA), and Power Solutions (OTCPK:PSIX). The most oversold stocks per their 14-day Relative Strength Index include Helen of Troy (HELE), HilleVax (HLVX), and Indivior (INDV). Short interest has moved higher on Blue Star Foods (BSFC), Volcon (VLCN), and Guess? (GES).

IPO watch: Hospital and healthcare clinic operator Ardent Health Partners (ARDT), insurance services provider Twfg (TWFG), and biotech firm Lirum Therapeutics (LRTX) are expected to price their IPOs and start trading in the week ahead. The analyst quiet period ends on Rectitude (RECT) to free up analysts to post ratings.

Dividend watch: Companies that have an ex-dividend date coming next week include AbbVie (ABBV), PNC Financial (PNC), Colgate-Palmolive (CL), Williams-Sonoma (WSM). Companies forecast to increase their quarterly dividend payouts include State Street (STT) to $0.76 from $0.69, Las Vegas Sands (LVS) to $0.22 from $0.20, Penske Automotive (PAG) to $1.05 from $0.96, Goldman Sachs (GS) to $3.00 from $2.75, and Bank of America (BAC) to $0.26 from $0.24. Read through some of the dividend stock picks from Seeking Alpha analysts.

Federal Reserve watch: The last week of Federal Reserve speakers before the pre-FOMC blackout period will keep interest rate watchers busy. BNP Paribas said the mix of inflation and labor market data for June has shown greater progress than the firm anticipated toward levels that would likely allow an initial rate cut. “Though we viewed the latest employment report as consistent with benign rebalancing in the job market, Fed Chair Powell more clearly emphasized labor market cooling and risks to that side of the mandate in his testimony before Congress on 9-10 July,” read the recent BNP report. The economists expect two 25-point rate cuts this year, and the quarterly cadence to continue through 2025, bringing the upper bound of the federal funds rate to 4.0% by the end of 2025. On Seeking Alpha, analyst Jeremy LaKosh thinks that it is clear that the economy is in a pronounced disinflationary state based on the last three inflationary reports. “If annualized, the April, May, and June core inflation reports come in at 2.1%. The steepening nature of the implied inflation curve demonstrates that recent (versus older) data is bringing inflation down,” he observed. He reasoned that the current trajectory of disinflation justifies a September rate cut but sees the forecast beyond that as still uncertain.

Netflix earnings preview: Netflix (NFLX) is due to report earnings on July 18. Netflix management guided for 16% growth in second quarter revenue and operating income of $2.5 billion. Management has already warned that subscriber additions will be lower on a sequential basis due to the normal seasonal demand patterns. The consensus estimates from analysts are for revenue of $9.53 billion, EPS of $4.77, and free cash flow of $1.65 billion to be disclosed. Netflix is expected to have added 4.77 million subscribers during the quarter on a net basis to end with a streaming paid membership tally of 273.6 million. On Wall Street, TD Cowen boosted its price target on Buy-rated Netflix to $775 from $725 ahead of the streamer’s report. “Netflix continues to benefit from paid sharing initiatives, strong underlying biz demand, and burgeoning ad tier,” highlighted analyst John Blackledge. “Best in class content is one of the reasons Netflix has been able to consistently deliver sector leading churn rates,” noted Hargreaves Lansdown analyst Matt Britzman ahead of the report. “It’s expensive, but Netflix remains the only company set to increase content spend, giving a comparative advantage versus legacy media and its challengers,” he added. Options trading on Netflix implies a 7% share price swing after the report is released.

Investor events: On the M&A front, HashiCorp (NASDAQ:HCP) shareholders will vote on the pending merger with IBM (IBM), and shareholders of Hibbett (HIBB) will vote on the acquisition offer from JD Sports Fashion (OTCPK:JDSPY). Lucid Group (LCID) CEO Peter Rawlinson and Robinhood Markets (HOOD) CEO Vlad Tenev will both speak at the Fortune Live Media Conference in Park City, Utah. Other events with the potential to lead to share price moves include Charles Schwab’s (SCHW) business update call, Rio Tinto’s (NYSE:RIO) Q2 operations review, and Scotts Miracle-Gro’s (NYSE:SMG) Investor Day.