By Nicholas Jasinski | Monday, July 29
Bated Breath. Most of this week's market-concerning action has yet to come. Over the next four days, several central banks make policy decisions, U.S.-China trade talks resume, major economic data is released, and 147 S&P 500 companies report earnings.
Today was merely the calm before the storm. The S&P 500 pulled back slightly from its record high set on Friday, falling 0.2%. The Dow Jones Industrial Average rose 0.1% while the Nasdaq Composite fell 0.4%. All are within half a percentage point of their all-time closing highs.
U.S. Treasury Secretary Steven Mnuchin and Trade RepresentativeRobert Lighthizer will negotiate with Chinese Vice-premier Liu He in Shanghai tomorrow. It's the first high-level round of trade talks since previous efforts broke down in May. Here's what three strategists and economists are watching for from the talks.
Plenty of economic data this week will provide insights into various parts of the U.S. economy. The Conference Board’s July consumer confidence index is forecast to indicate improving household sentiment when released tomorrow. Last month's Chicago Purchasing Managers Index for June showed a contraction of the Chicago-area manufacturing sector for the first time since January 2017. The July survey results are out on Thursday, followed by Jobs Friday. The July employment report from the Bureau of Labor Statistics is expected to show 160,000 new jobs added and a steady unemployment rate at 3.7%.
Companies reporting earnings through Friday include Apple, General Electric, Verizon Communications, and Exxon Mobil.
But most of all, markets will be watching central banks around the world. The Bank of Japan and the Bank of England are both likely to hold their benchmark interest rates steady when they announce monetary policy decisions tomorrow and Thursday, respectively.
Starting tomorrow is also the Federal Reserve's interest rate-setting committee's July meeting. Things are expected to go differently there, with federal-funds futures market pricing implying about a 75% probability of a quarter-percentage point rate cut – and 25% implying a half point. The current rate has a target range from 2.25% to 2.50%.
The committee will release its statement on Wednesday afternoon, followed by a press conference with Chairman Jerome Powell. The last statement warned of a darkening economic picture abroad and other risks to U.S. economic growth, setting the stage for accommodative action like a rate cut this meeting. To help you position your portfolio for that outcome and more, Barron's has it covered from all angles. Here's how the Fed's decision on Wednesday impacts...
The stock market
The bond market
A U.S. delegation led by Treasury Secretary Steven Mnuchin heads to Shanghai to meet with their Chinese counterparts to discuss the ongoing trade war between the world’s two largest economies.
The Bank of Japan announces its monetary-policy decision. The central bank is widely expected to keep its key interest rate at negative 0.1%.
SunTrust Banks and BB&T will hold special shareholder meetings at which stockholders will be asked to approve the proposed merger of the two regional banks. The combined company would be the sixth-largest bank in the U.S. and called Truist Financial.
The Conference Board reports its Consumer Confidence Index for July. Economists forecast a 125.4 reading, up from June’s 121.5.
The National Association of Realtors releases its Pending Home Sales Index for June. Consensus estimates are for a 0.5% gain in pending sales, down from May’s 1.1% rise.