July Outlook: These 4 Market-Moving Events Will Decide the Fate of AI-Driven Rally

• July is expected to be an eventful month on Wall Street amid a plethora of key market-moving events.
• Investor focus will be fixated on the U.S. jobs report, CPI inflation data, and the Fed’s FOMC meeting.
• The start of the Q2 earnings season is also on the agenda, with several big names set to report their quarterly updates.
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As Wall Street wraps up a strong first half of the year, fueled by the ongoing AI rally in mega-cap tech names, investors are now turning their attention to several major events in July that could influence market direction.

S&P 500 Daily Chart

Source: Investing.com

With investors continuing to gauge the outlook for interest rates, inflation, and the economy, a lot will be on the line in the month ahead.

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As such, here's a detailed look at the key events to watch as the calendar flips to July:

1. Fed Chair Powell at the ECB Forum - July 2

Federal Reserve Chair Jerome Powell is set to make an appearance at the ECB Forum on Central Banking in Sintra, Portugal on Tuesday, July 2.

Powell Speaks at ECB Forum

Source: Investing.com

Powell has used this platform in the past to pre-announce key policy decisions, making his remarks potentially pivotal.

Investors will scrutinize his speech for hints about the Fed's future policy direction, especially ahead of the critical FOMC meeting at the end of the month.

2. U.S. Jobs Report - Friday, July 5

The U.S. Labor Department will release the monthly jobs report at 8:30 AM ET on Friday, July 5, and it will be a critical indicator of the health of the U.S. labor market.

With employment numbers serving as a bellwether for economic stability and growth, investors will be keenly observing job creation, unemployment rates, and wage growth. Forecasts center around a continued solid pace of hiring, even if the increase is smaller than in previous months.

The consensus estimate is that the data will show the U.S. economy added 180,000 positions in June, slowing from jobs growth of 272,000 in May. The unemployment rate is seen holding steady at 4.0%.

U.S. Unemployment Rate

Source: Investing.com

A strong jobs report could reinforce confidence in the economy, while weaker-than-expected numbers might raise concerns about a potential slowdown.

3. U.S. CPI Data - Thursday, July 11

On Thursday, July 11, the Consumer Price Index (CPI) inflation data will be released. This report will be closely monitored as inflation remains a central issue for both the Federal Reserve and the broader market.

While no official forecasts have been set yet, expectations for annual headline CPI range from an increase of 3.0% to 3.2%, compared to a 3.3% annual pace in May.

Meanwhile, estimates for the year-on-year core CPI figure - which does not include food and energy prices - center around an increase of 3.1%-3.3%, compared to May’s 3.4% reading.

U.S. CPI Y/Y

Source: Investing.com

The headline annual CPI rate peaked at a 40-year high of 9.1% in the summer of 2022 and has been on a steady downtrend since, however, prices are still rising at a pace well above the Fed’s 2% target range despite a series of 11 rate hikes.

Any surprises in the inflation figures could significantly impact market sentiment and expectations for future Fed policy actions.

4. Q2 Earnings Season Kickoff - July 12

The second-quarter earnings season kicks off on Friday, July 12 with JPMorgan Chase (NYSE:JPM) releasing its quarterly results. Earnings reports will be crucial in assessing the health and performance of corporate America amid economic uncertainties.

Key companies reporting in July include:

• Tesla (NASDAQ:TSLA) on July 23
• Meta Platforms (NASDAQ:META) on July 24
• Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) on July 25
• Amazon (NASDAQ:AMZN) on July 30

These tech giants, which have been major contributors to the market's year-to-date rally, will be under the spotlight. Their earnings and guidance will provide valuable insights into the state of the tech sector and broader market trends.

Some of the other notable companies reporting results also include Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), Netflix (NASDAQ:NFLX), American Express (NYSE:AXP), Visa (NYSE:V), Coca-Cola (NYSE:KO), United Airlines (NASDAQ:UAL), Ford (NYSE:F), General Motors (NYSE:GM), Boeing (NYSE:BA), Caterpillar (NYSE:CAT), AT&T (NYSE:T), Verizon (NYSE:VZ), ExxonMobil (NYSE:XOM), and Chevron (NYSE:CVX).

FOMC Meeting - Wednesday, July 31

The Federal Reserve's FOMC policy meeting on Wednesday, July 31 will arguably be the most anticipated event of the month.

With ongoing debates about the appropriate timing for rate cuts, the Fed's statement and Chairman Powell's subsequent press conference will be closely watched.

The FOMC is not publishing updated ‘dot-plot’ economic forecasts, and so any changes in the Fed's tone or policy outlook could have significant implications for the stock market.

As of Friday morning, financial markets are pricing in a roughly 90% chance of no action, according to the Investing.com Fed Rate Monitor Tool. That would leave the benchmark Fed funds target range between 5.25% and 5.50%, where it has been since July 2023.

Fed Funds Rate

Source: Investing.com

Coming into 2024, investors were expecting multiple rate cuts. However, stubbornly high levels of inflation and signs of a resilient economy have continually pushed back that possibility.

Conclusion

July promises to be a month packed with critical events that could shape the stock market's trajectory for the remainder of the year. From key economic data releases to pivotal central bank meetings and corporate earnings reports, investors must stay vigilant and prepared for potential volatility.

To navigate the current market backdrop I used the InvestingPro stock screener to build a watchlist of high-quality stocks that are showing strong relative strength and have healthy growth prospects.

Not surprisingly, some of the names to make the list include Nvidia (NASDAQ:NVDA), Alphabet (NASDAQ:GOOG), and Chipotle Mexican Grill (NYSE:CMG) to name a few.

InvestingPro Screener Results

Source: InvestingPro

Whether you're a novice investor or a seasoned trader, leveraging InvestingPro can unlock a world of investment opportunities while minimizing risks amid the challenging backdrop of elevated inflation, high interest rates, and mounting geopolitical turmoil.

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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR S&P 500 ETF (SPY), and the Invesco QQQ Trust ETF (QQQ).

I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies' financials.

The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.

Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.