The U.S. equity markets ended the last week in the red after a four-week winning streak. For instance, the S&P 500 fell 1.34% on Friday, dragging the index lower by 0.63% last week. Similarly, the tech-heavy NASDAQ Composite Index fell 2.24%, while the Dow Jones Industrial Index declined by a marginal 0.01% in the week ended on August 19, 2022.
The markets moved lower as the Federal Reserve emphasized policymakers might continue to tighten the monetary policy even though it seemed inflation peaked in June.
The 10-year Treasury note rose to 2.97% as a hawkish stance by the central bank resulted in a sell-off in government bonds. Oil prices also fell to their lowest levels since early 2021 on fears of slowing global demand and the possibility of another round of lockdowns in China.
While the earnings season has cooled off, several companies will report quarterly results in the upcoming week. These include:
Zoom Video
In fiscal Q3 of 2022 (ended in July), Zoom Video (NASDAQ: ZM) is forecast to report revenue of $1.12 billion and adjusted earnings of $0.45 per share. In the year-ago quarter, its reported revenue and earnings of $1.02 billion and $0.98 per share, respectively.
Macy’s
Retail giant Macy’s (NYSE: M) is expected to report revenue of $5.5 billion and adjusted earnings of $0.85 per share. In the year-ago period, its revenue and earnings stood at $5.84 billion and $1.29 per share, respectively.
Salesforce
Salesforce (NYSE: CRM) is on track to report revenue of $7.7 billion and earnings of $1.02 per share in the quarter ended in July. In the year-ago quarter, it reported revenue of $6.34 billion and earnings of $1.48 per share.
We can see that a challenging macro-environment, rising commodity prices, and higher interest rates are all dragging profit margins of companies lower. Other large-cap companies reporting quarterly results include Nvidia (NASDAQ: NVDA), Nordstrom(NYSE: JWN), Dell (NYSE: DELL), and TD Bank (NYSE: TD).
Macro-economic data will drive S&P 500 performance
In addition to earnings, policymakers of the Federal Reserve will meet at the annually held Jackson Hole Symposium to discuss issues impacting the country’s economy.
Data for the Personal Consumption Expenditures (PCE) price index will be released on Friday, providing insights on whether inflation is slowing down. There will also be updates on the housing market as new and pending home sales will be published in the upcoming week.
Investors will follow the developments of the Federal Reserve closely and try to analyze its impact on inflation and the labor force. The Fed believes inflation which fell to 8.5% in July from over 9% in June, is still a massive risk to the economy.
Despite rising inflation and lower corporate earnings, the job market in the U.S. is extremely hot. For example, non-farm payrolls in July rose to 528,000, which has split estimates over the size of interest rate hikes next month.
The Jackson Hole meeting is likely to impact other asset classes, such as gold. Historically, gold and interest rates have an inverse relationship. If the Fed continues to remain hawkish and increases interest rates by 75 basis points in September, gold prices may decline at an accelerated pace in the last quarter of 2022.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
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Happy Friday to all Traders, Investors, Analysts!!!!
This week would be one of the crazy week in Stock Market history.
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