The recent streak of gains in markets could be in jeopardy next week as traders come up against a big Federal Reserve meeting and earnings shift into high gear. The Dow Jones Industrial Average is set to close out a 10-day winning streak on Friday as some soft inflation reports this month, and excitement around artificial intelligence, continue to support the bull case for equities. However, markets are ramping up just ahead of several catalysts next week that could roil markets. Many investors are anticipating the Fed will be “one and done” after its policy meeting in the week ahead, but a surprise move by the central bank or any hawkish commentary from Fed Chair Jerome Powell could potentially throw cold water on recent investor enthusiasm. “Our over interpreting the statement and the press conference may well cause some agita in markets,” said Art Hogan, chief market strategist at B. Riley Wealth Management. Will the Fed be one and done? Wall Street is anticipating a quarter percentage point rate hike at the conclusion of the Fed’s meeting on Wednesday, but more unclear is what the central bank will do in September. According to the CME FedWatch Tool, 83% of traders expect monetary policymakers will be done at that point. Instead, market participants will closely watch commentary from Powell on Wednesday to get a better gauge for what the central bank will do as it tries to navigate a soft landing. Many anticipate that Powell won’t diverge much from the narrative, possibly citing the strength of the labor market or the consumer, in the central bank’s ongoing fight against inflation. Shannon Saccocia, chief investment officer at NB Private Wealth, said she expects the statement will not be all that market-moving, and said traders will likely shift their attention to the Fed’s Jackson Hole economic symposium next month. “I think that’s where they have the opportunity if they want to reset expectations,” she said. Despite the recent rally, recession concerns still linger in the horizon for many as traders continue to monitor the lagged effect of interest rate hikes, as well as other recent signals of slowing in the economy. “We don’t believe it’s time to be aggressive here,” said Yung-Yu Ma, chief investment officer for BMO Wealth Management. “But we also think there’s a general sense of stability given that inflation is coming down and we expect it to continue to come down but I think our outlook is is more of a balanced approach here to the rest of the year.” ‘Floodgate’ of earnings season including tech The biggest week for earnings season is also up ahead, with results having been mixed thus far. Of the 89 companies in the S & P 500 that have reported, 75% have posted positive surprises. According to The Earnings Scout, that performance is below the three-year average of 80%. However, traders will get a clearer picture into the state of corporate America next week, where they will keep an eye on sales growth for companies. “It’s the week we all wait for, right?” said NB Private Wealth’s Saccocia. “Next week is really going to provide a significant amount of transparency in terms of the margin compression that everyone’s been anticipating because that’s really what’s driving, I think, when we came into this year, the lower expectations for earnings and this fear of an earnings apocalypse.” Big Tech companies such as Alphabet and Microsoft are on deck on Tuesday, and will likely steal the thunder from other reports. However, Saccocia urged investors also to keep an eye on the consumer giants or luxury consumer names for insight into how shoppers are digesting price increases. Next week’s calendar. All times ET. Monday 8:30 a.m.: Chicago Fed National Activity Index (June) 9:45 a.m.: S & P Global manufacturing PMI (July) 9:45 a.m.: S & P Global services PMI (July) Earnings: Domino’s Pizza , F5 Tuesday 9 a.m.: S & P/Case-Shiller home price index (May) 10 a.m.: Consumer confidence (July) Earnings: GE , Biogen , Danaher , GE HealthCare , GM , Alphabet , Visa , Microsoft Wednesday 10 a.m.: New home sales (June) 2 p.m.: FOMC policy decision Earnings: Coca-Cola , Boeing , Hess , ADP , CME Group , AT & T , eBay Thursday 8:30 a.m.: Initial jobless claims 8:30 a.m.: Durable goods orders (June) 8:30 a.m.: Second-quarter GDP (first preliminary reading) 10 a.m.: Pending home sales (June) Earnings: Honeywell , Hershey , McDonald’s , Mastercard , Northrop Grumman , Royal Caribbean , Enphase Energy , First Solar , T-Mobile , Ford Motor , Intel , Mondelez Friday 8:30 a.m. Personal Consumption Expenditure index (June) 10 a.m.: Consumer sentiment (July final) Earnings: Exxon Mobil , Chevron , Procter & Gamble , T. Rowe Price
