Company Earnings Set to Rock the Markets (Premium Edition)

Last week there was unrest in the financial markets due to concerns that the Fed will raise interest rates even more due to the eurozone's declining growth prospects and the PPI and CPI indexes in the US reaching new heights. That appears unlikely now.

However, inflation is still on the top of investors' minds. Do you recall last year when the Fed discussed temporary inflation? It would appear that we are still in the transitional stage.

With a 9.1 percent year-over-year gain on Wednesday, inflation is continuing to rise. Although not as awful as anticipated for US banks, we nevertheless experienced some relatively poor initial earnings. This week we will see numerous companies' reports which will drive the market.

KEY MARKET DRIVERS & CALENDAR

Tuesday, July 19 – Building Permits (MoM) (June)Thursday, July 21 – Philadelphia Fed Manufacturing Index (July)Company Earnings

This week will include relatively few economic indicators, including existing house sales, housing starts, and the Philadelphia Fed Manufacturing Index. Before the FOMC meeting on July 26–27, the Federal Reserve will be silent. However, futures trading on the fed funds contract will be eagerly monitored as the chances of a 100-point raise swing widely.

The week will be dominated by earnings reports as well-known companies like Twitter (TWTR), Netflix (NFLX), Tesla (TSLA), and Bank of America (BAC) report amid lots of turmoil. While recent readings on consumer demand, labor shortages, and supply chain difficulties will still be crucial, investors have already factored in that the earnings season will reveal some disappointments and downward revisions.

S&P 500 SECTORS

Tip: Use this section to know various sectors' performance and weight portfolios, or look for trades. Modern portfolio theory stresses the importance of diversification, but recently several sectors like technology have outperformed others like utilities. This is also a way to narrow the sectors to find investment opportunities.

Bad Week For China

Beijing has had a bad week. The second quarter of 2018 saw a significant slowdown in the Chinese economy due to numerous lockdowns. The second-largest economy in the world had its GDP decrease by 2.6 percent from April through May and June, significantly less than the average prediction of a decline of about 1.4 percent. The People's Bank of China must now decide whether to decrease interest rates or not in light of this. The first option runs the danger of rising inflation, which has been kept at a manageable level up until now. The latter might send the economy into stagflation, mostly brought on by the slow growth.

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