Written by Noreen Burke
Investing.com – It’s set to be a busy week in the markets with the Federal Reserve meeting, a string of notable earnings and some key economic data on the list. While no policy changes are expected from the Fed’s two-day meeting, more details about the tapering discussions that began in June are likely to emerge. With stock markets near record levels, investors will be watching closely the earnings of the technology heavyweights, and on Thursday investors will get a first look at US GDP growth in the second quarter, which is expected to be the peak of the post-pandemic recovery. Meanwhile, the euro zone is to release a batch of data on Friday, including inflation, GDP and unemployment reports. Here’s what you need to know to start your week.
- fed taper talk
The Fed wraps up its day on Wednesday and its statement will be scrutinized for any mention of the time frame for scaling back the asset purchase program, although Chairman Jerome Powell made clear in his recent testimony to Congress that the US economy still needs the center’s full support.
In June, policymakers began debating when to begin cutting the $120 billion in monthly purchases of Treasuries and mortgage-backed securities.
Powell might point out that while the tapering debate has begun, there is still plenty of time before officials can come to a conclusion about what they will do. Policy makers are expected to highlight risks from the rapidly spreading variable delta, which investors fear could derail the economic recovery.
Most analysts expect the Fed to give a clearer indication of its plans to scale back its quantitative easing program at its annual conference in Jackson Hole, Wyoming, in late August, before an official announcement on tapering later in the year.
- data dump
Aside from the Fed meeting, investors will get an update on the strength of the US economy as the data is unloaded at the end of the month.
Monday sees numbers for, which are expected to hit new highs, followed by and on Tuesday.
The highlight is Thursday with a first look at second-quarter GDP, and while expectations have shrunk again in recent weeks, growth is still expected to be solid year-over-year. This would indicate the recovery of all the output lost due to the pandemic and could be the peak of recovery after the pandemic.
The numbers are due out on Friday, which include the Fed’s rumored favorite measure of inflation – a.
- deluge of profits
US earnings are taking off at high speed and investors will be watching the biggest tech names to gauge whether the recent shift away from the deflationary trade to the developing stocks that have driven markets over the past decade will hold.
Earnings from Apple (NASDAQ:) and Alphabet (NASDAQ) on Tuesday, Facebook (NASDAQ 🙂 on Wednesday and Amazon (NASDAQ :)) on Thursday can accelerate the shift to growth again.
FAANG stocks – Facebook, Amazon, Apple, Netflix (NASDAQ 🙂 and Google’s Alphabet – are usually known for providing excellent returns in the stock market. But only Facebook and Alphabet have been defeated so far this year as investors pile into financial firms, energy companies and other companies that should benefit from the post-pandemic economic recovery.
Other earnings results that will be in the spotlight include Microsoft (NASDAQ :), Tesla (NASDAQ :), Boeing (NYSE :), Larva (NYSE :), Pfizer (NYSE:), Procter & Gamble (NYSE:), and McDonald’s (NYSE:).
- market volatility
Growth and value stocks swung for most of the past week as investors weighed the rising delta variable against upbeat earnings results and economic data.
“There is a push and pull and there is clearly a struggle in the market,” Chris Zacarelli, chief investment officer at The Independent Advisor Alliance in Charlotte, North Carolina, told Reuters. “There is a huge difference of opinion about whether the future is bright or whether there are clouds on the horizon.”
All three major US stock indexes closed at record levels on Friday, closing above 35,000 for the first time ever after a volatile week as risk appetite waned and waned. On Monday, the S&P 500 index posted its biggest one-day drop since May before continuing to post its biggest one-day jump since March the next.
Earnings and data may calm or exacerbate market anxiety in the coming week.
- Eurozone recovery
In the euro zone, Friday’s second-quarter data will give investors some insight into the strength of the bloc’s economic recovery from the double-dip recession with a vaccine recovery.
Meanwhile, figures released on the same day are expected to show that inflation reached the European Central Bank’s 2% target in July. The European Central Bank said inflation may be temporarily allowed to exceed its target when “strong or sustained” monetary support is needed.
European Central Bank President Christine Lagarde said last Thursday that a new wave of the coronavirus pandemic could pose a risk to the euro zone’s economic recovery after the bank hinted at a longer period of monetary support at its latest policy meeting.
–Reuters contributed to this report