The S&P 500 closed Friday at 7,411.98, down 0.6% on the week, while the Nasdaq fell 2.1%. Oil was the dominant story: The price of Brent crude jumped 7% Thursday to settle at $100.69 a barrel, its first close above $100 since May 26, after Yemen's Houthi militants claimed strikes on two Saudi oil tankers in the Red Sea (chart). President Trump said the US would hold Iran responsible for any further attacks on shipping, threatening "major military punishment" against Tehran. Big Tech's earnings kickoff was depressing. Both Alphabet and Tesla fell sharply after reporting negative free cash flow.
Looking ahead, the calendar is jam-packed this week with lots of earnings reports. The monetary policy committees of the Fed, the Bank of Japan, and the Bank of England will be meeting. Four more Magnificent-7 companies are set to report. Q2 GDP and June PCED inflation readings both are due Thursday.
Here are the key economic releases most likely to shape investors’ thinking this week:
(1) Fed Policy & Global Central Banks. The FOMC's two-day meeting concludes Wednesday with Chair Kevin Warsh's press conference to follow. The federal funds rate futures market is signaling two rate hikes over the next 6-12 months (chart). The June meeting’s Summary of Economic Projections showed nine of 19 officials penciling in a hike this year. This split raises the degree of dissention we might see at the July meeting whether the committee votes to hike or to hold.
The Bank of England (Thu) and the Bank of Japan (Fri) both are expected to hold their respective policy rates steady (chart).
(2) Earnings. Four Magnificient-7 companies report earnings this week: Microsoft and Meta report after the close on Wednesday, followed by Apple and Amazon on Thursday. Collectively, the four companies account for about 17% of the S&P 500’s market capitalization.
The consensus of analysts’ estimates now implies aggregate Q2-2026 operating EPS growth for S&P 500 companies of 35.8% y/y, up from 22.9% a week earlier (chart). But 35.8% is a misleading figure due to the distortive effects of mark-to-market investment gains in some Mag-7 companies.
Given how the market punished Alphabet and Tesla for reporting negative free cash flow, all eyes are on this week's Mag-7 reporters.
(3) GDP & PCED Inflation. The advance estimate of Q2 GDP (Thu) follows a final Q1 reading of 2.1% annualized growth. The Atlanta Fed's GDPNow model had Q2 tracking at just 1.7% as of July 17, with its next update due Monday (chart). We expect the preliminary estimate to come in closer to 2.0%. Business investment continues to lead. Final sales to private domestic purchasers should be strong.
June's PCED (Thu) follows May's hot readings of 4.1% y/y headline and 3.4% core, the highest since 2023 (chart). The Cleveland Fed's Inflation Nowcasting model projects June's comparable rates easing to 3.65% and 3.33% y/y, with headline PCED falling 0.12% m/m. This week's Houthi attacks and Brent's move back above $100 a barrel threaten the recent disinflation trend.
(4) Employment. The next initial claims report (Thu), covering the week ended July 25, follows last week's 187,000 print, the lowest since 1969. That represented a four-week average of 207,500 (chart). Layoffs remain low.
