Wall Street heads into one of its busiest weeks of the summer, with second-quarter earnings season shifting into high gear alongside key inflation data and closely watched testimony from Federal Reserve Chair Kevin Warsh.
The week kicks off with a flood of bank earnings. JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup and Wells Fargo report on Tuesday, offering investors an early read on loan growth, investment banking activity, consumer health and the impact of higher interest rates.
Morgan Stanley (NYSE:MS) and Bank of New York Mellon follow on Wednesday, while Regions Financial and Fifth Third Bancorp (NASDAQ:FITB) report Friday.
Technology investors will also be watching closely as AI heavyweights take the spotlight. ASML reports Wednesday, followed by Taiwan Semiconductor Manufacturing Co. (TSMC) and Netflix on Thursday.
Beyond earnings, investors will be parsing a packed economic calendar. Tuesday's Consumer Price Index (CPI) report and Wednesday's Producer Price Index (PPI) are expected to shape expectations for the Fed's next policy move. Warsh will deliver his semiannual testimony before Congress on Tuesday and Wednesday, while the Fed's Beige Book, released Wednesday, will provide an updated snapshot of economic conditions across the country.
Economists expect June inflation to cool as lower gasoline prices offset price pressures elsewhere. "Taken together, June's CPI report should point to some slowing in underlying inflation," Wells Fargo said, adding that "the broader data do not suggest inflation pressures are re-accelerating across the economy."
Retail sales data due Thursday will offer another gauge of the health of the US consumer. Wells Fargo expects lower gasoline prices to weigh on headline sales but noted that underlying consumer spending has remained resilient this year, even as household finances show signs of becoming more stretched.
Investors will also be keeping a close eye on developments in the Middle East after renewed tensions between the United States and Iran pushed oil prices higher and slowed commercial shipping through the Strait of Hormuz.
"This week will be a test to see if the continued skirmishes between the US and Iran can be absorbed by financial markets without causing major damage," Kathleen Brooks, research director at XTB, said.
While Brent crude has climbed, Brooks noted that "the prevailing view is that the current situation will not evolve into another full-scale war," helping keep oil prices below the $80-a-barrel mark.
The renewed geopolitical uncertainty has weighed on semiconductor stocks, but Brooks believes earnings could ultimately have the bigger impact on markets.
"With geopolitical risks rising once more, the focus for investors will be earnings season," she said. "Analysts remain upbeat on the earnings outlook, which could be why US stocks managed to eke out gains last week."