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Wall Street Eagerly Waits for Q2 Earnings Season to Commence
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We start out a new full week of trading rather quietly — no economic data prints released before the opening bell this morning, nor Q2 earnings reports, which begin registering at a slightly hotter clip than we’ve seen thus far. We’re coming off a relatively flat Friday, but pre-market futures are in the red: the Dow -170 points, the Nasdaq -100 and the S&P 500 — currently carrying a five-day winning streak — is -25 points.
A few years back, when Alcoa (AA - Free Report) was still part of the Dow 30 index, earnings season “officially” began upon the aluminum giant’s earnings report. In subsequent years, we’ve come to see the big Wall Street banks’ reports as the start of earnings season. Those begin this week: JPMorgan Chase (JPM - Free Report) comes out with Q2 tallies Thursday, Citigroup (C - Free Report) and Wells Fargo (WFC - Free Report) — among many other financial firms — on Friday.
Even before these, however, we’ll hear from PepsiCo (PEP - Free Report) on Tuesday and Delta Air Lines (DAL - Free Report) Wednesday. So even before we get results from how the biggest financial institutions in the world fared in Q2, we’ll find out how the consumer dealt with making Consumer Discretionary choices amid skyrocketing gasoline prices, which then bled into costs for Transportation, thus leading to hire prices for delivered goods.
Mid-week, perhaps the biggest print of economic data all month — at least, before the Fed policy meeting at this end of July — arrives in the form of Consumer Price Index (CPI) numbers, which has become shorthand for inflation. It’s expected June ratcheted up inflation even more, especially year over year, to +8.8% from +8.6% previously reported. This is obviously continuing a four-decade high.
That said, “core” inflation — which strips out food and energy costs — is expected to come down a tad, to +5.7% from +6.0% last reported. This is still obviously much higher than the Fed’s desired +2% inflation, but at least it’s headed in the right direction. And if this data shows demand destruction having an effect on things like housing prices, we may even see a downward surprise on these inflation metrics.
Clearly, this is what’s behind the Fed hiking interest rates 150 basis points (bps) since March, with another 50-75 bps expected in the last week of July. That the market is trading down at this hour tells us there is plenty of concern about CPI and Q2 earnings results — particularly how companies guide through the remainder of 2022 and into ’23. But could a few better-than-expected prints change this trajectory?
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Wall Street Eagerly Waits for Q2 Earnings Season to Commence
We start out a new full week of trading rather quietly — no economic data prints released before the opening bell this morning, nor Q2 earnings reports, which begin registering at a slightly hotter clip than we’ve seen thus far. We’re coming off a relatively flat Friday, but pre-market futures are in the red: the Dow -170 points, the Nasdaq -100 and the S&P 500 — currently carrying a five-day winning streak — is -25 points.
A few years back, when Alcoa (AA - Free Report) was still part of the Dow 30 index, earnings season “officially” began upon the aluminum giant’s earnings report. In subsequent years, we’ve come to see the big Wall Street banks’ reports as the start of earnings season. Those begin this week: JPMorgan Chase (JPM - Free Report) comes out with Q2 tallies Thursday, Citigroup (C - Free Report) and Wells Fargo (WFC - Free Report) — among many other financial firms — on Friday.
Even before these, however, we’ll hear from PepsiCo (PEP - Free Report) on Tuesday and Delta Air Lines (DAL - Free Report) Wednesday. So even before we get results from how the biggest financial institutions in the world fared in Q2, we’ll find out how the consumer dealt with making Consumer Discretionary choices amid skyrocketing gasoline prices, which then bled into costs for Transportation, thus leading to hire prices for delivered goods.
Mid-week, perhaps the biggest print of economic data all month — at least, before the Fed policy meeting at this end of July — arrives in the form of Consumer Price Index (CPI) numbers, which has become shorthand for inflation. It’s expected June ratcheted up inflation even more, especially year over year, to +8.8% from +8.6% previously reported. This is obviously continuing a four-decade high.
That said, “core” inflation — which strips out food and energy costs — is expected to come down a tad, to +5.7% from +6.0% last reported. This is still obviously much higher than the Fed’s desired +2% inflation, but at least it’s headed in the right direction. And if this data shows demand destruction having an effect on things like housing prices, we may even see a downward surprise on these inflation metrics.
Clearly, this is what’s behind the Fed hiking interest rates 150 basis points (bps) since March, with another 50-75 bps expected in the last week of July. That the market is trading down at this hour tells us there is plenty of concern about CPI and Q2 earnings results — particularly how companies guide through the remainder of 2022 and into ’23. But could a few better-than-expected prints change this trajectory?