This week in the financial markets promises a shift from the recent calm of the Independence Day holiday.
The start of earnings season, crucial CPI data, and potential indications of a rate cut from Federal Reserve Chairman Jerome Powell's Congressional testimony are all on deck in the coming few days.
Kicking off the latter half of 2024, both the Nasdaq and S&P 500 are at new all-time highs. significant economic data releases.
On Friday, JP Morgan will lead the earnings reports, setting the tone for the financial sector.
Meanwhile, political and economic attention will turn to Washington, D.C., where Federal Reserve Chairman Jerome Powell is set to testify before Congress. His testimony could be pivotal, according to Freedom Capital Markets (NASDAQ:FRHC) chief global strategist Jay Woods, particularly as he might signal a potential rate cut.
“Not only could a lower Consumer Price Index (CPI) number increase the odds for a cut in September, one could easily argue - why wait so long? Why not cut at the July 31st meeting if all the data points continue to fit the soft landing narrative?”
The answer is simple, Woods writes in his weekly newsletter.
“Jerome Powell has telegraphed every move the Fed has made under his leadership. He doesn't make a move without ample warning. Granted, he has been late to react in the past as we all recall ‘transitory inflation’ and leaked information to the Wall St. Journal so he wouldn’t surprise the markets.”
Elsewhere, the release of the CPI on Thursday is highly anticipated. Last month, the number dropped to 3.3%, breaking a three-month trend of exceeding expectations. Analysts are hopeful for a further decrease to 3.1%, which could bolster the case for a rate cut as early as the Federal Reserve's September meeting.
Key economic indicators to watch include Wholesale Inventories on Wednesday, Initial Jobless Claims and CPI on Thursday, and PPI along with Consumer Sentiment on Friday.
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