Stocks rallied Friday, with major indexes hitting new records as solid earnings and optimism about a U.S.-European Union trade deal buoyed sentiment. The Dow Jones Industrial Average rose about 1.3%, the S&P 500 climbed 1.5%, and the Nasdaq added 1% for the week.
This week promises significant market movement. Investors will be watching the Federal Reserve’s policy meeting, a key U.S. jobs report, and a slew of Big Tech earnings, alongside a potential August 1 tariff deadline. The Federal Open Market Committee is widely expected to keep interest rates unchanged on Wednesday. However, Fed Chair Jerome Powell’s post-meeting press conference could signal when rate cuts might begin. Options traders are pricing in about a 60% chance of a September rate cut, according to data.
- Key economic events this week include the FOMC meeting and the July U.S. jobs report.
- Major tech companies like Microsoft, Meta, Apple, and Amazon are set to release earnings.
- Amazon is highlighted as a potential buy due to strong AWS and advertising performance.
- Starbucks is flagged as a sell, citing consumer spending concerns and turnaround uncertainty.
Big Tech and Economic Data Take Center Stage
Friday’s U.S. employment report for July is a major economic focus. Economists predict the economy added 108,000 jobs, a slowdown from June’s 147,000. The unemployment rate is forecast to tick up to 4.2% from 4.1%.
Beyond jobs, investors will also digest second-quarter Gross Domestic Product (GDP) data and the core Personal Consumption Expenditures (PCE) price index, a favored inflation gauge for the Fed.
The earnings calendar is packed, with four of the “Magnificent Seven” tech giants reporting. Microsoft and Meta Platforms are scheduled for Wednesday evening. Apple and Amazon will follow on Thursday afternoon.
Other notable companies reporting include Qualcomm, ARM Holdings, Microstrategy, Coinbase, Robinhood, PayPal, Boeing, United Parcel Service, Ford, UnitedHealth, ExxonMobil, Chevron, Procter & Gamble, Visa, Mastercard, Starbucks, Reddit, Roblox, and Spotify.
Stock Pick: Amazon Poised for Upside
Amazon looks like a strong candidate for a buy this earnings week. The company’s robust performance in cloud services (AWS) and advertising, coupled with cost discipline and a resilient operating model, suggests potential for positive surprises when it reports second-quarter results after market close on Thursday at 4:00 PM ET. The subsequent earnings call with CEO Andy Jassy is scheduled for 5:30 PM ET.
Options markets indicate a potential stock swing of +/- 5.4% following the report, mirroring a 3% jump after its May earnings release. Analysts project earnings per share (EPS) of $1.32, up 4.8% from the previous year, with revenue expected to grow 9.5% to $162.1 billion. AWS and advertising are key growth engines, benefiting from AI infrastructure demand and effective e-commerce platform monetization.
Guidance will be critical. Despite potential tariff impacts, Amazon is likely to offer an optimistic outlook, supported by cost optimization, streamlined logistics, and expansion in its cloud and advertising segments.
Amazon shares closed Friday at $231.44, just below their February 4 all-time high of $242.52. The stock has gained 22.5% in the past three months, showing strong momentum. The Relative Strength Index (RSI) stands at 63.81, suggesting strength without being overbought. Technical indicators on hourly and daily charts flash “buy” signals.
Stock Alert: Starbucks Faces Headwinds
Starbucks, conversely, appears vulnerable to earnings disappointment this week. The coffee giant reports its fiscal third-quarter results on Tuesday at 4:05 PM ET. The fast-food sector is experiencing slowing demand as inflation impacts consumer discretionary spending, potentially affecting Starbucks’ same-store sales.
Analysts have turned bearish, with all 27 surveyed revising EPS estimates downward. Implied volatility suggests a potential +/- 6.2% stock move post-earnings, heightening the risk of a miss.
Wall Street expects Starbucks to report $0.65 per share in profit, a 30% decrease year-over-year. The company’s turnaround plan faces intense scrutiny, with early results not yet inspiring confidence. Sales are projected to increase only 2% annually to $9.29 billion, hampered by sluggishness in the U.S. and China. Increased competition from more affordable options adds further pressure.
Starbucks shares closed Friday at $94.42 and are trading below their 200-day moving average, indicating potential downside risk heading into its earnings release.
