Why Next Week Will Be Decisive for US Markets in 2022 Investing.com
The coming week, July 10-15, will be one of the most important days of the year for US markets. There are two main reasons for this:
- US inflation data
- American earnings
Wednesday US Market Calendar
Source: Investing.com
On Wednesday, July 13, the US Bureau of Statistics will release widely projected inflation data for May. The headline (consumer price index) is expected to register a year-on-year growth of 8.7%, up slightly from the previous 8.6% reading.
Since the pessimistic outlook has already been priced in by the markets, a lower-than-expected figure may give investors breathing room at the much-needed moment.
Furthermore, as noted in some of my earlier analyses, expected inflation is already showing signs of moderation (see breakeven inflation below).
FRED 5-Year Breakeven Inflation Rate
Source: Fred
The other sharp issue for the week is the health of US earnings, particularly Big Tech stocks, which, as we know, weigh heavily in major stock indexes.
Looking at Refinitiv’s data, we see that earnings per share (EPS, middle chart) estimates are still positive and rising.
Expected RPS, EPS, and Profit Margin of the S&P 500
Source: Yardeney
On the other hand, in the chart below, Lance Roberts reports that in general, the S&P 500’s quarterly earnings are expected to be significantly lower than the previous quarter (orange column).
S&P 500 Earnings Annual Percentage Change
Source: Lance Roberts
Here, a better-than-expected reading is one that most likely already has, in contrast to what we see of inflation. Therefore, the expected or worse-than-expected average earnings may lead to new corrections in the market.
However, for both reasons, the next week will be crucial for the market movement in 2022.
Meanwhile, with the close of the second quarter, the equity markets again reported negative performance (for -16.1%), which, as noted on Right Horizon, if we look at history (see table below). Can also represent an opportunity.
Worst S&P 500 Quarterly Returns in History
Source: Fun Treasure
,
This article is written for informational purposes only; It does not constitute a solicitation, offer, advice, advice or recommendation to invest; As such, it is not intended to encourage the purchase of the property in any way. I would like to remind you that valuation of any type of asset is made from multiple perspectives and is highly risky, and therefore, any investment decision and associated risk remains with you.
