It’s a relatively quiet week on the economic calendar, shifting Wall Street’s attention toward geopolitical headlines and a handful of major corporate earnings. Here’s what’s happening …
- One last gasp for Q2 earning season this week, notable for just a couple of important names. This morning, reports are due from AutoZone, KB Home, and Thor Industries, followed Wednesday by Cintas Corporation, Paychex, General Mills, Uranium Energy, and Cracker Barrel. Thursday numbers are expected from Costco, Darden Restaurants, VinFast Auto, Blackberry, and Scholastic Corporation, followed by a relatively quiet Friday. *
- President Trump is set to meet with Chinese President Xi Jinping in Washington this week for three days of discussions, starting Wednesday. While investors are hoping for signs of progress, expectations for major breakthroughs remain low. Trade and AI are expected to be key topics. On trade, the focus will be on extending the current tariff truce and potentially negotiating limited concessions. On AI, the emphasis appears to be on improving communication between the two countries rather than slowing development. Treasury Secretary Scott Bessent recently noted that early discussions included a possible AI “notification mechanism” between the US and China. Adding to the significance of the meetings, a slate of high-profile business leaders from both countries are expected to attend, including Amazon’s Jeff Bezos, Tesla and SpaceX’s Elon Musk, NVIDIA’s Jensen Huang, and OpenAI’s Sam Altman. Their presence could help create opportunities for side discussions and potential dealmaking alongside the official talks. **
- As expected, the Federal Reserve, led by Chair Kevin Warsh, raised its benchmark interest rate by 0.25% last week. The bigger question now is whether this was a one-time move or the start of a broader tightening cycle. Based on the Fed’s messaging, the answer appears to be the latter. Warsh struck a hawkish tone in his press conference, emphasizing the Fed’s commitment to bringing inflation under control, while noting that the labor market remains healthy. Updated projections from policymakers also point to at least one additional rate hike before year-end. While higher rates typically create headwinds for stocks by increasing borrowing costs for businesses and consumers, markets reacted positively to the decision. The S&P 500 gained 1.1% the day after the announcement as investors took comfort in the Fed’s willingness to tackle inflation. For now, markets seem less concerned about higher rates and more reassured that the Fed is actively addressing one of the economy’s biggest challenges. ***
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