Weekly Financial Market Update: July 1-5, 2024

Weekly Financial Market Update: July 1-5, 2024

As we enter the first week of July 2024, the financial markets are poised for a relatively quiet period in terms of earnings reports, but there are still several key events and releases to watch.

Earnings Reports

This week marks the beginning of the second-quarter earnings season, although major reports are limited:

  1. Tuesday, July 2:

    • MSC Industrial (MSM): Expected earnings per share (EPS) of $1.34
    • Radius Recycling (RDUS): Expected EPS of -$0.66

  2. Wednesday, July 3:

    • Constellation Brands (STZ): Expected EPS of $3.46, up 18.9% year-over-year, with revenue forecast at $2.7 billion (+6.4% YoY). Analysts will be closely watching the performance of STZ’s beer division and any potential impact on its wine and spirits segment.
    • Simulations Plus (SLP): Expected EPS of $0.15

It’s worth noting that the stock market will close early at 1 pm Eastern Time on Wednesday, July 3, and will be closed on Thursday, July 4, for the Independence Day holiday.

Economic Data Releases

Key economic indicators scheduled for release this week include:

  1. Monday, July 1: UK payroll data
  2. Tuesday, July 2: U.S. trade data and University of Michigan consumer sentiment survey
  3. Wednesday, July 3: U.S. CPI (Consumer Price Index) and UK GDP data

These releases, particularly the U.S. CPI data, could provide insights into inflation trends and potentially influence Federal Reserve policy decisions.

Federal Reserve Announcements

A Federal Reserve policy decision is expected this week. Market participants will be closely monitoring any statements or signals regarding future interest rate movements, especially in light of the “high-for-longer” rate view that has been prevalent.

  1. Global Elections: 2024 is a significant year for global elections, with over half the world’s population voting. Investors should monitor potential policy shifts, particularly in areas such as fiscal policy and trade relations.

  2. U.S. Fiscal Deficit: The persistently large U.S. fiscal deficit is expected to continue influencing market dynamics, potentially reinforcing inflation pressures and affecting bond yields.

  3. AI and Tech Sector: The artificial intelligence theme continues to drive market performance, with companies like Broadcom showing strong AI-related revenue growth. This trend is expected to persist, potentially benefiting tech giants such as Microsoft, Alphabet, and Amazon.

Corporate Announcements and Market Movements

  1. Broadcom: Following a 21% surge in June and an upcoming 10-for-1 stock split, Broadcom remains a key player to watch in the AI sector.

  2. Tesla: The electric vehicle maker is set to release its second-quarter production and delivery report, which could provide insights into its performance amid increasing competition.

  3. McDonald’s: The fast-food giant’s recent value meal promotion and its strategy to balance inflation concerns with customer loyalty will be of interest to investors.

  4. Boeing: The aerospace company awaits a crucial Department of Justice decision regarding potential actions following violations of a prior agreement. This, along with ongoing production challenges, could significantly impact its stock performance.

  5. Spotify: The streaming service is expected to announce its second-quarter earnings, with analysts focusing on user growth and subscription retention rates.

Conclusion

While this week may be quieter in terms of earnings reports due to the holiday, investors should remain attentive to economic data releases, particularly inflation indicators, and any Federal Reserve announcements. The ongoing AI trend continues to shape market dynamics, especially in the tech sector. Geopolitical factors, including global elections and fiscal policies, may also play a significant role in market movements. As always, investors should approach the market with caution and consider these various factors in their investment decisions.