## If you’ve been wondering if the market is “cooked” or not, this week may finally unveil the answer. Here’s a quick look at what’s on the agenda:
- FOMC / Interest rate decision
- Inflation Data
- Israeli prime minister U.S. visit
- Earnings from Apple, Microsoft, Amazon, Meta
It’s needless to say how important this week is…let’s talk about the implications and expectations.
FOMC Meeting, Interest Rate Decision, and Inflation Data
If you’ve been a member with us, you know that our longstanding belief remains that the market is primarily by two things long term: interest rates and corporate profits. Corporate America has continued to produce strong earnings, giving investors a reason to remain optimistic.
Now comes interest rate question…will the Federal Reserve lower interest rates under new Fed Chair Kevin Warsh? Profits are only one side of the equation. If inflation remains elevated and forces the Federal Reserve to keep interest rates higher, or even consider raising them further, stock valuations could remain under pressure regardless of how well companies perform. The ideal outcome for stocks would be a Fed that acknowledges inflation risks but still appears patient and confident that price pressures will eventually cool. The more dangerous outcome would be any suggestion that additional rate hikes are becoming necessary. That would likely push Treasury yields higher, strengthen the dollar, and place renewed pressure on growth stocks.
The Feds’ rate decision comes just a day before June’s PCE Price Index, which is set to show inflation declining to 3.7% from the previous 4.1% reading. As you can imagine…the events on Wednesday and Thursday could either be a “double boost” catalyst for the market to shoot higher, or they can be a do double the damage back to back…we’ll be updating the outcome and implications as the data is released.
Israeli Prime Minister’s U.S. Visit
The United States has recently paused its attacks on Iran while diplomatic efforts continue, but major disagreements may remain over what happens next. Trump appears to be searching for an off ramp that avoids another prolonged military conflict, while Netanyahu may push for continued pressure on Iran and stronger protection surrounding Israel’s security. For the stock market, investors will primarily be watching for any update that changes the outlook for oil prices, shipping routes, or broader regional stability.
Apple, Microsoft, Amazon, and Meta Earnings
As if the Fed, inflation, and geopolitics were not enough, four of the world’s largest technology companies are also reporting earnings this week. Microsoft and Meta are scheduled to report after the market closes on Wednesday, while Apple and Amazon will report after Thursday’s close.
Collectively, these companies represent several trillion dollars in market value and touch almost every major part of the technology industry. Their results could influence semiconductors, memory, data centers, cloud software, digital advertising, consumer electronics, retail, logistics, and the broader Nasdaq. The biggest theme will once again be AI spending versus AI returns.
The market does not need perfect results, but it does need to see strong profits and clear evidence that AI spending is translating into real revenue. Strong earnings and upbeat guidance could help tech stocks regain momentum, while weak results or heavy spending without returns could raise doubts about the AI trade. By the end of the week, we’ll have a clearer sense of whether recent weakness is a buying opportunity or a sign that investors are starting to question the rally’s two key supports…lower rates and rising corporate profits.