The major averages rallied this week as the pace of earnings releases picked up and the results thus far have largely been better than feared. But next week is the true test: We will hear from the mega cap stocks (AAPL, AMZN, GOOGL, MSFT) that combined account for roughly 20% of the S & P 500 by market cap. Moreover, given the importance of these four names in terms of the global economy, the results and commentary on the conference calls will have ripple effects and no doubt influence the direction of the next material move for the major averages. We will provide some thoughts Monday on key themes to keep in mind as earnings season ramps up. At the macroeconomic level, next week also brings some key reports that will certainly play into the action. On Wednesday, we have the FOMC meeting; according to the CEM FedWatch Tool, investors are currently pricing in a nearly 80% chance for a 75 basis-point hike and a 20% chance for a 100 basis-point hike. On Thursday we will get our first read on the second quarter gross domestic price index. If that comes in negative (Wall Street is currently expecting an increase), we will have officially entered recession territory as defined as two successive quarters of contraction. Again, not the base case, but we were also surprised to see a contraction in the first quarter, so something to keep a close eye on as the report will come on the back of the FOMC meeting. Under the hood this week, communication services closed lower, selling off on the back of SNAP earnings, followed by utilities and health care, while consumer discretionary lead to the upside followed by materials and industrials. Meanwhile, the U.S. dollar index pulled back slightly to around the 106 level. Gold stands at about $1,725 per ounce. WTI crude prices remain at just under $100 per barrel. The yield on the 10-year Treasury pulled back to around the 2.76% level. No trades this past week as we prepare for earnings season to kick into high gear. Looking back We received earnings results from Johnson & Johnson (JNJ), Halliburton (HAL) and Danaher (DHR). On the macroeconomic front: On Tuesday, June housing starts came in 2% lower on a monthly basis at 1.56 million, missing estimates of 1.58 million, while building permits fell 0.6% monthly to 1.695 million, exceeding estimates of 1.65 million. On Wednesday, existing home sales were reported to have fallen 5.4% monthly in June and declined 14.2% versus the year ago period. This comes as mortgage demand reached a 22-year low. On Thursday, initial jobless claims for the week ending July 16 came in at 251,000, missing expectations of 240,000. What’s ahead Within the portfolio, we will hear from Microsoft (MSFT) and Alphabet (GOOGL) on Tuesday after the closing bell; from Humana (HUM) on Wednesday before the opening bell; from Meta Platforms (META), Qualcomm (QCOM) and Ford (F) on Wednesday after the closing bell; from Linde (LIN) and Honeywell (HON) on Thursday before the opening bell; from Apple (AAPL) and Amazon (AMZN) on Thursday after the bell; and from Procter & Gamble (PG), Chevron (CVX) and AbbVie (ABBV) on Friday before the opening bell. Here are some other earnings reports and economic numbers to watch in the week ahead: Monday, July 25 Before the bell: Philips (PHG), Newmont Goldcorp (NEM), ROM Inc (RPM), Dorman Products (DORM), Squarespace (SQSP) After the bell: Whirlpool (WHR), Universal Health (UHS), NXP Semi (NXPI), Packaging Corp (PKG), Celestica (CLS), Logitech (LOGI), Crane (CR), Brown & Brown (BRO), F5 Networks (FFIV) Tuesday, July 26 Before the bell: Centene (CNC), General Motors (GM), Archer-Daniels (ADM), UPS (UPS), Albertsons (ACI), General Electric (GE), Raytheon Tech (RTX), Coca-Cola (KO), 3M (MMM), McDonald’s (MCD), Kimberly-Clark (KMB), Fiserv (FISV) After the bell: Chubb (CB), Visa (V), Mondelez (MDLZ), Texas Instruments (TXN), Stryker (SYK), Canadian Rail (CNI), Chipotle (CMG) 10:00 a.m. EST: New Home Sales Wednesday, July 27 Before the bell: United Micro (UMC), T-Mobile (TMUS), Bunge (BG), Boeing (BA), Bristol-Myers (BMY), General Dynamics (GD), Kraft Heinz (KHC), Penske Auto (PAG), Sherwin-Williams (SHW), Waste Management (WM), Otis (OTIS), Norfolk Southern (NSC), Spotify (SPOT), Rockwell Automation (ROK), Shopify (SHOP) After the bell: Molina Health (MOL), Flex (FLEX), CH Robinson (CHRW), Lam Research (LRCX), United Rentals (URI), Equinix (EQIX), ServiceNow (NOW), Hologic (HOLX), Teledoc (TDOC), Etsy (ETSY) 8:30 a.m. EST: Durable Goods Orders 10:00 a.m. EST: Pending Home Sales 2:00 p.m. EST: FOMC Meeting Thursday, July 28 Before the bell: Valero (VLO), Stellantis (STLA), Comcast (CMCSA), Pfizer (PFE), Anheuser-Busch (BUD), Merck (MRK), Thermo Fisher (TMO), Northrup Grumman (NOC), Southwest Air (LUV), Altria (MO), Mastercard (MA), LKQ (LKQ), Textron (TXT), Martin Marietta (MLM), Fortive (FTV), Vista Outdoor (VSTO), Pitney Bowes (PBI) After the bell: Intel (INTC), US Steel (X), Edison (EIX), Olin (OLN), VF Corp (VFC), Yum China (YUMC), Chemours (CC), Edwards Lifesciences (EW), Digital Realty (DLR), Roku (ROKU) 8:30 a.m. EST: Gross Domestic Price Index 8:30 a.m. EST: Initial Jobless CLaims Friday, July 29 Before the bell: Exxon (XOM), Phillips 66 (PSX), LyondellBasell (LYB), Charter (CHTR), Imperial Oil (IMO), Enbridge (ENB), AstraZeneca (AZN), Magna (MGA), CNH Industrial (CNHI), Colgate-Palmolive (CL) 8:30 a.m. EST: Personal Spending and Income (See here for a full list of the stocks in Jim Cramer’s Charitable Trust .) 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The major averages rallied this week as the pace of earnings releases picked up and the results thus far have largely been better than feared. But next week is the true test: We will hear from the mega cap stocks (AAPL, AMZN, GOOGL, MSFT) that combined account for roughly 20% of the S&P 500 by market cap.
