- Get ready for a make-or-break five days for stocks.
- Microsoft, Google parent Alphabet, and Meta will all report their second-quarter earnings, while the Federal Reserve is set to make its latest interest-rate decision.
"Magnificent Seven" tech stocks and the Federal Reserve are likely to be the key focus for investors in a crucial week that could either make or break the 2023 stock-market rally.
Eyes will turn to mega-cap second-quarter earnings reports and the central bank's latest interest-rate decision as traders try to gauge whether equities will carry on surging, with the benchmark S&P 500 already up 18% year-to-date.
Microsoft, Google parent Alphabet, and French luxury goods giant LVMH are all set to release their results for the three months ending June 30 on Tuesday.
Fellow blue-chip names Amazon and Meta Platforms are also set to report later in the week.
The Fed will also announce its policy decision from its July meeting on Wednesday, with traders expecting it to raise borrowing costs by 25 basis points after "skipping" a rate hike last time out.
Fed tightening tends to weigh on stocks because people can find better returns by parking their cash in a savings account rather than buying shares – but investors are hoping that cooling inflation will allow the central bank to wind down its battle against soaring prices soon.
Wedbush tech analyst Dan Ives is expecting a great week for stocks, predicting that mega-caps will likely announce they've made big strides in developing artificial intelligence, which has emerged as a key theme for markets this year.
"Get out the popcorn as we expect good news," he wrote in a note to clients Sunday.
"Many will benefit in this AI Game of Thrones battle," Ives added. "This topic will be a key focus of investors this week as the Street is trying to identify those tech players well-positioned for this $800 billion AI revolution that is set to transform the tech industry over the next decade."
But others sounded a more cautious tone after a mixed start to this earnings season for the US's best-known companies.
Big banks like JPMorgan and Bank of America saw their share prices rally after beating analysts' expectations, but Tesla and Netflix both disappointed at the end of last week.
The EV maker posted lower profit margins after aggressively slashing its prices, while the streaming giant trumpeted its password-sharing crackdown but missed Wall Street's revenue targets.
"Tesla and Netflix results spoiled a strong start to earnings sentiment after US financials began reporting their results," Saxo Bank strategists said Monday in a research note seen by Insider.