Not Only FOMC... This Week's M4 Launch and US Employment Also in Focus

This Week's US Economic Schedule

A busy week has begun on Wall Street in the United States. This week is packed with major announcements, including the July Federal Open Market Committee (FOMC) regular meeting, which is expected to be a key turning point in U.S. monetary policy, as well as earnings reports from major big tech companies and employment data. Notably, following Tesla and Google Alphabet, which caused a sharp drop in the New York stock market last week due to earnings concerns, four more companies among the 'Magnificent 7 (M7)' are currently preparing to report their results.

Four M7 Companies to Release Earnings

According to Yahoo Finance and others on the 28th (local time), 171 companies listed on the S&P 500 will release their quarterly earnings this week. Among them, the most attention is focused on the big tech companies belonging to the M7 group, including Microsoft (MS), Amazon, Meta Platforms, and Apple. Since technology stocks, which have led the artificial intelligence (AI) boom, have recently shown a sluggish trend, the earnings announcements of these companies are expected to determine the direction of the stock market in August.

Locally, there are even concerns that additional corrections could accelerate, turning the 'magnificent' seven stocks into 'miserable' seven stocks (Wall Street Journal). Alphabet and Tesla, which opened the earnings season for tech stocks last week, triggered the plunge in the New York stock market. In particular, despite Alphabet’s surprise earnings, its stock price plummeted amid growing skepticism about profitability bubbles surrounding AI investments.

Ryan Grabinsky, a strategist at Strategas Securities, noted in an investor memo, "The most common question from clients is whether this is a correction or the beginning of something bigger (a crash)." He added, "Investors are now questioning the return on investment in AI."

Companies to watch are not limited to the M7. Earnings reports from major semiconductor companies considered beneficiaries of AI, such as AMD, Arm, Qualcomm, and Intel, are also concentrated this week. Additionally, McDonald's, Boeing, Starbucks, ExxonMobil, and Chevron will release their earnings.

FOMC at a Turning Point: Will It Signal a September Rate Cut?

The July FOMC regular meeting, held on the 30th and 31st, is attracting attention as a turning point because it may confirm signals for rate cuts in the second half of the year. The Federal Reserve (Fed) is expected to keep the current benchmark interest rate at 5.25?5.5% during this meeting while possibly delivering messages hinting at a monetary policy shift as early as September. The key issue is how concretely and to what extent these signals will be confirmed through the policy statement and Fed Chair Jerome Powell’s press conference.

Currently, the market is increasingly evaluating that the Fed is in a position to cut rates immediately. The June Personal Consumption Expenditures (PCE) price index, a key inflation indicator monitored by the Fed, slowed to a 2.5% increase. The labor market, which has fueled inflation, is also showing recent signs of cooling. However, the Fed, which faced harsh criticism in 2022 for being late in responding to inflation by considering it temporary, is emphasizing a 'cautious decision' above all before shifting monetary policy. The steady trend in U.S. economic growth also adds weight to the Fed’s cautious stance.

Matthew Luzzetti, Chief Economist at Deutsche Bank, said, "The overall tone of the July FOMC should suggest that a September rate cut is a reasonable baseline without committing to preemptive action." According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market is pricing in a more than 99% chance that the Fed will cut rates by at least 0.25 percentage points at the September FOMC. The probability of a rate cut starting in July remains around 4%.

On August 2, the U.S. Department of Labor will release the July nonfarm payroll report, a key labor market indicator watched by the Fed. The market currently expects the increase in nonfarm payrolls for July to be 175,000, continuing the slowing trend. The monthly Job Openings and Labor Turnover Survey (JOLTs) and ADP private employment report will also be released during the week. In addition to the Fed, the Bank of Japan (BOJ) and the Bank of England (BOE) are also scheduled to make interest rate decisions this week.

This content was produced with the assistance of AI translation services.