The U.S. stock market seems poised for a constructive start today, as we head into a busy week on Wall Street. As we were writing this report, the S&P 500 Index futures were up slightly in early morning trading. Over the next few days, investors will be paying close attention to the Federal Reserve, while also sifting through a large batch of corporate profit reports.
In economic news, today should be relatively quiet. Tomorrow, the Conference Board’s consumer confidence index for the month of July will be published, along with the latest monthly S&P Case-Shiller home price index. On Wednesday, the FOMC (Federal Open Market Committee) will wrap up its regularly scheduled two-day meeting. At this juncture, most investors expect that the Federal Reserve will lift interest rates by 25 basis points. However, it should be noted that progress has been made on the inflation front, and it is possible that the central bank will soon assume a less-aggressive stance. Later in the week, investors will get a look at the advanced estimate for second-quarter GDP (gross domestic product). Here, the numbers will likely show that the U.S. economy expanded at a rate of about 1.7%, annualized. A healthy GDP reading is important, as many voices on Wall Street have been predicting that the economy might soon be heading into a recession. The PCE (Personal Consumption Expenditures) price index for the month of June will also be released at the end of the week.
In the corporate arena, numerous large corporations will be weighing in with profit reports over the next few days. Specifically, we will hear from many leading technology companies, including Google’s parent company Alphabet (GOOG), Microsoft (MSFT), and Meta Platforms (META). These reports will be closely scrutinized by investors, especially since the technology sector has been driving the market higher for some time, and quite a few investors may be wondering if current valuations are warranted.
From a technical vantage point, the S&P 500 Index continues to drift higher, adding to an already impressive run. Timing the stock market with any accuracy has proven to be a difficult task, and it should be noted that stocks typically do not advance forever without periods of consolidation or profit-taking along the way. The broader market is currently trading at a price-to-earnings (P/E) multiple of almost 18, which is not inexpensive, and probably only makes sense if the economic news and the corporate sector continue to provide support. - Adam Rosner
At the time of this article’s writing, the author had a position in Alphabet.
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