What to Expect in the Markets Next Week

What to Expect in the Markets Next Week
What to Expect in the Markets Next Week


U.S. equity markets rallied late in the week following a report showing retail sales rose more than economists anticipated on resilient consumer demand despite higher prices. However, markets still posted losses for the week due to earlier declines after disappointing earnings reports from big banks and the latest reading of the Consumer Price Index (CPI) showed prices rose at a faster-than-expected annual rate of 9.1% in June. For the week, the Dow lost 0.2%, the S&P 500 shed 0.9%, and the Nasdaq declined 1.6%. 

Bond prices rallied this week, with the yield on the 10-year U.S. Treasury note declining to 2.93% at the end of the week as demand for safe-haven assets continued to rise. The yield curve inversion also deepened, with the yield on the two-year Treasury note at 3.12% exceeding that of the 10-year note. Oil prices fell steeply amid lingering concerns about a potential global recession, and slowing demand for fuel in the U.S. market. The price of West Texas Intermediate (WTI) crude fell from $104 per barrel at the start of the week to just over $97 per barrel on Friday.

Next week will be an eventful one dominated by corporate earnings reports, as earnings season continues. Bank of America, Goldman Sachs, IBM, Johnson & Johnson, Lockheed Martin, Netflix, Tesla, United Airlines, AT&T, Snap, and more will report results. We can also expect important updates on the U.S. housing market, with June housing starts and building permits on Tuesday, followed by existing home sales on Wednesday. Overseas, the European Central Bank (ECB) is widely expected to raise its benchmark interest rate for the first time since 2011. The U.K. and Japan are set to release their latest inflation figures tracking the month of June, providing an update on global price pressures.


Key Takeaways

  • Earnings season continues, with more financial firms due to report on Monday, including Bank of America, Goldman Sachs, and Charles Schwab.
  • Johnson & Johnson, Novartis, and Netflix report on Tuesday.
  • Tesla, Abbott Laboratories, Baker Hughes, Discover Financial Services, United Airlines, Harley Davidson, and others report on Wednesday.
  • June housing starts and building permits will be released on Tuesday, followed by existing home sales on Wednesday.
  • The European Central Bank (ECB) is expected to raise its benchmark interest rate for the first time since 2011.

Events Calendar:

Monday, July 18

  • Bank of America (BAC), IBM (IBM), Charles Schwab (SCHW), Goldman Sachs (GS), and Prologis (PLD) report earnings
  • NAHB Housing Market Index (July)

Tuesday, July 19

  • Johnson & Johnson (JNJ), Novartis (NVS), Lockheed Martin (LMT), Netflix (NFLX), Halliburton (HAL), Citizens Financial (CFG), and J.B. Hunt (JBHT) report earnings
  • Housing Starts (June)
  • Building Permits (June)
  • U.K. Employment Growth (April)

Wednesday, July 20

  • Tesla (TSLA), Abbott Laboratories (ABT), Crown Castle (CCI), CSX Corp. (CSX), Kinder Morgan (KMI), Biogen (BIIB), Discover (DFS), Baker Hughes (BKR), Nasdaq Inc. (NDAQ), Las Vegas Sands (LVS), Equifax (EFX), Northern Trust (NTRS), United Airlines (UAL), and Harley Davidson (HOG) report earnings
  • Existing Home Sales (June)
  • U.K. Inflation Rate (June)

Thursday, July 21

  • Danaher (DHR), AT&T (T), Phillip Morris (PM), Union Pacific (UNP), Marsh & McLennan (MMC), Blackstone (BX), Capital One Financial (COF), IQVIA (IQV), Travelers (TRV), Freeport-McMoran (FCX), Dow Inc. (DOW), Snap Inc. (SNAP), Tractor Supply Co. (TSCO), Quest Diagnostics (DGX), Domino’s Pizza (DPZ), American Airlines (AAL), and Mattel (MAT) report earnings
  • Philadelphia Fed Manufacturing Index (July)
  • Conference Board Leading Index (June)
  • ECB Policy Meeting/Interest Rate Decision
  • Japan Inflation Rate (June)

Friday, July 22

  • Verizon (VZ), NextEra Energy (NEE), American Express (AXP), and Schlumberger (SLB) report earnings
  • S&P Global Composite PMI – Flash Estimate (July)
  • U.K. Retail Sales (June)

Earnings Season Continues

Next week could be one of the busiest weeks this earnings season, with more financial firms due to report on Monday, including Bank of America, Goldman Sachs, and Charles Schwab. On Tuesday, we can expect earnings from healthcare giants Johnson & Johnson and Novartis, along with a highly-anticipated release from streaming giant Netflix. Tesla, Abbott Laboratories, Baker Hughes, Discover Financial Services, United Airlines, Harley Davidson, and others report on Wednesday. On Thursday, AT&T, Union Pacific Railroad, Snap, Domino’s Pizza, American Airlines, and Mattel will also release results. Closing out the week, Verizon and American Express will report their second-quarter earnings on Friday.

Housing Market Updates

On Monday, the National Association of Home Builders (NAHB) will release its national Housing Market Index (HMI) for July, which has declined steeply in recent months, falling to a score of 67 in June from a recent peak of 84 recorded in December of last year. June housing starts and building permits from the U.S. Census Bureau will follow on Tuesday, with consensus estimates calling for a slight rebound in housing starts to 1.58 million units, from 1.55 million recorded in May. Housing starts had plummeted over 14% in May from a pandemic-era peak of 1.81 million starts in April as rising mortgage rates, surging material costs, and already-high housing prices held back the housing market in recent months, with further cooling expected in the near future. 

The National Association of Realtors (NAR) will release the latest update to existing home sales on Wednesday. Existing home sales are projected to hover at 5.4 million in June, following a 3.4% month-over-month decline in May. Home sales have been on a steep downward trend since February, decelerating from a January peak of 6.49 million. The combination of rising mortgage rates and record-high price gains have priced many prospective homebuyers out of the market.

ECB Interest Rate Decision

On Thursday, the European Central Bank (ECB) is expected to raise its benchmark interest rate, the deposit facility rate, by 25 basis points (bps) at the conclusion of its July policy meeting. The rate hike will be the ECB’s first in over ten years, raising the benchmark interest rate to -0.25% from -0.5%, a level it has held since 2014. Surging inflation in the eurozone, currently running at a record high annual rate of 8.6%, has prompted the ECB to abandon its accomodative monetary policy stance of the past decade and prepare to raise interest rates for the first time since 2011.

In recent months, a growing disconnect has emerged in the monetary policy trajectories of the ECB and the U.S. Federal Reserve, which has raised interest rates more aggressively by a cumulative 150 bps since March. By contrast, the ECB has yet to raise rates in 2022, and is significantly behind its U.S. counterpart in addressing rising inflation. The divergence and growing concerns about recession risks have caused the euro to depreciate considerably relative to the U.S. dollar, with the euro falling below dollar parity for the first time since 2002 this week.



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