Earnings Boom, Dovish Data, and a Roookie Fed Chair: What's Next for Markets?
The second quarter earnings season has been stellar, with multinational corporations and retail companies reporting significant growth. Retailers' Q2 reports this week will provide fresh clues on consumer strength, while NVIDIA's report next Wednesday is expected to show a whopping 50% bottom-line EPS growth rate.
The latest economic data, including July inflation and PPI reports, have been dovish, with core CPI rising by just 0.2% last month, matching consensus. Implied odds of a September Fed rate hike eased after the data release, and Wall Street economists predict a 0.22% uptick in the core PCE Price Index.
However, some consumer blemishes this summer include the Cyclospora outbreak affecting names like Sweetgreen and Yum! Brands, while Chipotle has been stung by reduced burrito demand following the multi-state jalapeño Salmonella outbreak. These may be one-offs, but other fast-casual names face longer-term issues.
Following this week's retailer earnings, all eyes will soon turn to Jackson Hole, Wyoming, where Fed Chair Kevin Warsh will address the financial world on August 28. The event is an annual gathering of central bankers, and markets have been treated to volatility catalysts in recent years.