What happens across this busy Global Week Ahead?

• The Q2 S&P500 earnings season is kicking off, with 
• The world's largest chipmaker, and
• Key U.S. banks reporting results, while 
• Macro data out of the U.S. and China will give a fresh perspective on the state of growth, inflation pressures, and trade flows.

Next are Reuters’ five world market themes, re-ordered for equity traders—
 

(1) Taiwan Semi, the World’s Largest Make of AI Chips, Reports Q2 Results

The world's largest manufacturer of advanced AI chips, Taiwan's TSMC TSM, will report second-quarter earnings on ‌Thursday.

The results come days after South Korean memory-chip giant SK Hynix SKHY pulled off a blockbuster $26 billion U.S. share sale, and amid a rising debate on whether the AI-fueled semiconductor rally still has further to run.

TSMC, Asia's most valuable listed company and a key supplier to Nvidia (NVDA Quick QuoteNVDA - Free Report) , Apple (AAPL Quick QuoteAAPL - Free Report) , AMD (AMD Quick QuoteAMD - Free Report) and Broadcom AVGO, is expected to offer one of the clearest readings yet on AI demand.

Investors will be keen to see whether it upgrades its 2026 revenue growth and capital spending forecasts.

The company said last month it was scrambling to keep up with relentless AI demand and avoid becoming a bottleneck in the chip supply chain, while also hinting it would like to raise prices for customers.
 

(2) The Bulk of U.S. Q2 Earnings Season Gets Underway

The U.S. earnings season gets under way next week, with Wall Street's biggest banks setting the tone for what investors hope will be another strong quarter for corporate America.

Five of the six largest U.S. lenders, including JPMorgan Chase (JPM Quick QuoteJPM - Free Report) and Goldman Sachs (GS Quick QuoteGS - Free Report) , report on Tuesday, followed by Morgan Stanley (MS Quick QuoteMS - Free Report) a day later.

Trading desks are expected to have had a bumper quarter as market volatility kept investors busy.

Beyond the banks, investors will also hear from a string of heavyweight names including Netflix (NFLX Quick QuoteNFLX - Free Report) , BlackRock (BLK Quick QuoteBLK - Free Report) and Johnson & Johnson (JNJ Quick QuoteJNJ - Free Report) .

Expectations are running high.

S&P 500 companies are forecast to post a hefty +23.4% jump in second-quarter earnings from a year ago, according to LSEG IBES, after first-quarter profits came in much stronger than many had expected.
 

(3) The Strait of Hormuz Conflict Continues

U.S. President Donald Trump's declaration that an interim ceasefire agreement with Iran is "over" has fired up volatility across all markets.

Oil has briefly topped $80 a barrel, serving a reminder of the risk of another pickup in inflation.

Crude flows through the Strait of Hormuz have been increasing, however, which should help keep a lid on prices.

But with the U.S. and Iran trading blows, there is little visibility on whether that pace can be sustained, or increase meaningfully.

Traders have loaded up on options that give them the right to buy Brent futures above the current price by the end of July — a ‌sign many believe oil might look cheap right now.

LSEG data shows the biggest jump in holdings was for options to buy crude between $86 and $91 a barrel by the end of July.

The caveat is they have also maintained their largest holdings — options to sell Brent at either $69 or $70.
 

(4) On Tuesday, June U.S. CPI Data Comes Out. On Thursday, U.S. Retail Sales

A packed week of U.S. economic data could give investors their clearest read yet on whether inflation is cooling — or proving stubborn enough to keep the Fed on its toes.

The spotlight falls on June Consumer Price Inflation (CPI) on Tuesday, followed by Producer Price Inflation (PPI) a day later.

Thursday's Retail Sales figures will offer another clue to the strength of the U.S. consumer, whose spending has been a key support for the economy.

Fears that the economy was running too hot abated after a softer-than-expected June jobs report, but investors are still trying to gauge how worried the Federal Reserve is about inflation, consistently running ahead of the 2% annual target.

Minutes from the Fed's June meeting showed policymakers remained uneasy about price pressures under new Chair Kevin Warsh.

Warsh himself is expected to deliver his first testimony on monetary policy before Congress on Tuesday.
 

(5) Fresh Mainland China Macro Data Get Closely Watched Too

Chinese data will be closely watched for signs of how the AI boom and Iran war are impacting the world's second-biggest economy.

Trade has been one of the few bright spots as Beijing tries to steer growth away from its long-troubled property sector and towards domestic consumption, which remains sluggish.

Export data on Tuesday are expected to show shipments rising +18.0% year-on-year in June, slightly cooler than the +19.4% expansion seen in May, which was driven by demand for chips and other technology goods.

The bigger test might come on Wednesday, when China reports second-quarter GDP, with growth expected to slow to +4.5% year-on-year.

The economy expanded +5% in the first quarter, beating forecasts and at the top of Beijing's growth target, but most of the period was before war broke out in Iran, roiling energy markets.
 

Zacks #1 Rank (STRONG BUY) Stocks

Next are three Zacks #1 (STRONG BUY) large-cap stocks.

These names are re-ordered, using their F12M P/E valuation ratios.

I start with the most overvalued stock, and end with the most reasonable stock.

(1) ASE Technology ASX: This is a $43 a share stock, with a market cap of $88.8B. 

It is found in the Zacks Electronics-Semiconductor industry. The stock holds a Zacks Value score of D, a Zacks Growth score of A, and a Zacks Momentum score of F.

F12M P/E: 47.8.

Image Source: Zacks Investment Research

ASE Technology Holding Co Ltd. is a provider of semiconductor manufacturing services in assembly and testing.

The company develops and offers complete turnkey solutions covering front-end engineering testing, wafer probing and final testing as well as IC packaging, materials and electronic manufacturing services.

It operates primarily in Taiwan, China, South Korea, Japan, Singapore, Malaysia, Mexico, United States and Europe.

ASE Technology Holding Co Ltd, formerly known as ASE Industrial Holding Co., is based in Kaohsiung, Taiwan.

(2) Synopsis SNPS: This is a $443 a share stock, with a market cap of $83.2B.

It is found in the Zacks Computer Software industry. The stock holds a Zacks Value score of F, a Zacks Growth score of C, and a Zacks Momentum score of D.

F12M P/E: 29.5.
 

Image Source: Zacks Investment Research

Synopsys is a vendor of electronic design automation (EDA) software to the semiconductor and electronics industries.

The company offers a full suite of products used in the logic synthesis and functional verification phases of chip design, including a broad array of reusable design building blocks.

It also sells physical synthesis and physical design products as well as physical verification products.

The company's products are used to design a chip, from concept to the point of delivery to the manufacturer for fabrication.

Synopsis provides software and hardware, which are used to develop electronic systems that incorporate chips.

Additionally, the company provides Intellectual Property (IP) used in semiconductor design and manufacturing to simplify the design process and accelerate time-to-market for its customers.

Synopsis reports revenues in three segments, namely Time-Based Products, Upfront Products and Maintenance and Service.

(3) Cummins CMI: This is a $674 a share stock, with a market cap of $92.3B.

It is found in Zacks Automotive-Internal Combustion Engine industry. The stock holds a Zacks Value score of C, a Zacks Growth score of C, and a Zacks Momentum score of C.

F12M P/E: 22.8.

Image Source: Zacks Investment Research

Cummins is a leading global designer, manufacturer and distributor of diesel and natural gas engines and powertrain-related component products.

Powertrain components include fuel systems, turbochargers, transmissions, batteries and electrified power systems, among others.

Headquartered in Columbus, IN, the company offers products to original equipment manufacturers (OEMs), distributors and dealers through a network of company-owned and independent distributor facilities.
 

Key Global Macro

Tuesday’s June U.S. CPI data should be a key trader focus.

But Chair Warsh’s two days of testimony matters, almost as much, to this Fed obsessed stock market.

On Monday, Mainland China’s Exports for June come out. The prior reading was +19.4% y/y in USD terms. The Import numbers come out too. That prior reading was +27.4% y/y.

On Tuesday, the U.S. CPI for June comes out. The prior broad CPI reading for May was a high +4.2% y/y. The June m/m data looks to decline -0.1%.

Ex food & energy CPI data? That U.S. inflation rate should remain at a+2.9% y/y mark.

New Fed Chair Warsh testifies.

On Wednesday, the U.S. PPI data for June comes out. Look for another strong +0.4% m/m PPI increase, in line with the +0.4% increase seen in May.

The Bank of Canada (BoC) should keep its policy rate at 2,25%.

Fed Chair Warsh continues to testify to Congress.

The Fed’s Beige Book, showing of regional economic conditions, comes out.

On Thursday, U.S. retail sales for June come out. The prior month data was running at a +6.9% y/y nominal rate. Look for a +0.3% m/m increase for June, following a +0.9% m/m print in May.

Ex autos? That may be down slightly, by -0.1% m/m.

On Friday, the U. of Michigan consumer sentiment data for June comes out, to close the week. The prior May index was a low 49.5.
 

Conclusion

On July 8th, Zacks Research Director Sheraz Mian shared a Q2 earnings update.

His five key points:

(1) As usual, major bank earnings kick off the Q2 earnings season.

JPMorgan, Bank of America (BAC Quick QuoteBAC - Free Report) , Citigroup (C Quick QuoteC - Free Report) and Wells Fargo (WFC Quick QuoteWFC - Free Report) kick off the June-quarter reporting cycle for the Finance sector — on July 14th.

Bank stocks in general and these four stocks in particular have enjoyed a decent but otherwise unspectacular run this year, as some of the earlier geopolitical risk factors have eased lately.

Banks are cyclical businesses, so any real or perceived reduction in economic risk is positive for their outlook.

(2) Zacks currently expects total Q2 earnings for the S&P500 index to be up +24.0% from the same period last year, on +11.3% higher revenues.

We expect 11 of the 16 Zacks sectors to enjoy positive earnings growth.

(3) Excluding the significant upward revisions to Energy sector estimates?

Aggregate Q2 earnings estimates for the remainder of the S&P500 index would still be in positive territory, since the start of April.

(4) The Tech sector has been a critical growth pillar since Q3-23.

Tech is expected to continue playing that role in Q2-26, with expected earnings growth of +48.5%.

Excluding the Tech sector’s substantial contribution?

Q2 earnings growth for the rest of the S&P500 index would be +12.2% (versus +24.0% otherwise).

(5) Q2 earnings for the ‘Magnificent 7’ group of companies are expected to be up +28.5% from the same period last year on +24.4% higher revenues.

Excluding the ‘Mag 7’ contribution?

Q2 earnings for the rest of the index would be up +22.5% (versus +24.0%).

That’s it for me.

Enjoy this mid-July trading week.

Warm Regards,

John Blank, PhD.
Zacks Chief Equity Strategist and Economist