Markets see a decline in advance of Wednesday's Federal Open Market Committee (FOMC) meeting outcomes
In the week of July 30, 2025, Wall Street faced a series of key events that tested market resilience. The Federal Open Market Committee (FOMC) meeting, the peak of earnings season, and significant US economic data releases kept investors on their toes.
The FOMC meeting concluded on July 30, with the Fed maintaining the federal funds rate at 4.25%-4.5%. Fed Chair Jerome Powell emphasised this decision in his Wednesday remarks.
Earnings season reached its peak this week, with major tech companies like Microsoft, Meta, Apple, and Amazon reporting their Q2 results. These companies collectively represent over $11 trillion in market capitalization, making their results crucial for market direction.
US economic data releases were mixed. On Wednesday, Q2 GDP growth was expected at +2.4% annualized, with Q2 core PCE inflation expected to ease to +2.3%. July ADP employment change was expected at +80,000 jobs. Thursday saw the release of initial weekly unemployment claims, Q2 employment cost index, June personal spending and income growth, June core PCE inflation, and July Chicago PMI. Friday's data included July nonfarm payrolls, unemployment rate, average hourly earnings, ISM manufacturing index, and University of Michigan consumer sentiment.
Markets also watched potential trade deal news ahead of a Friday deadline, which could add volatility.
Stock indexes initially moved higher on Tuesday but fell back later. The S&P 500 Index, Dow Jones Industrials Index, and Nasdaq 100 Index all closed down on Tuesday. Stocks fell back due to mixed US economic news, a -7% fall in UnitedHealth Group, and a -7% tariff floor indicated by President Trump.
However, better-than-expected quarterly corporate earnings results and positive trade news supported gains in stocks initially. For instance, Sarepta Therapeutics received a recommendation that patients who can walk be allowed to take the company's gene therapy Elevidys again. Carrier Global forecasted full-year free cash flow of $2.4 billion to $2.6 billion, below the consensus of $2.55 billion. Yet, Corning forecast Q3 core EPS of 63 cents-67 cents, better than the consensus of 62 cents.
Other notable corporate earnings reports included UnitedHealth Group's Q2 adjusted EPS of $4.08, weaker than the consensus of $4.59. Royal Caribbean Cruises Ltd forecasted Q3 adjusted EPS of $5.55-$5.65, weaker than the consensus of $5.84. United Parcel Service pulled guidance for the year due to "current macro-economic uncertainty."
M&A activity was supportive of stocks with Union Pacific acquiring Norfolk Southern and Baker Hughes acquiring Chart Industries for $13.6 billion.
Overseas stock markets settled mixed, with the Euro Stoxx 50, China's Shanghai Composite, and Japan's Nikkei Stock 225 closing up, down, and up respectively.
Federal funds futures prices are discounting the chances for a -25 bp rate cut at 2% at the Tue/Wed FOMC meeting and 66% at the following meeting on September 16-17. The 10-year German bund yield rose +1.9 bp to 2.708%, while the 10-year UK gilt yield fell -1.4 bp to 4.633%.
The Conference Board US Jul consumer confidence index rose +2.0 to 97.2, stronger than expectations of 96.0.
Several other companies are set to report quarterly earnings on the date of publication, including Amkor Technology, Albemarle Corp, Align Technology Inc, Allstate Corp/The, Altria Group Inc, American Electric Power Co Inc, American Water Works Co Inc, Automatic Data Processing Inc, AvalonBay Communities Inc, Bunge Global SA, CH Robinson Worldwide Inc, Cognizant Technology Solutions, Dexcom Inc, eBay Inc, Entergy Corp, Equinix Inc, Everest Group Ltd, Extra Space Storage Inc, F5 Inc, Fair Isaac Corp, FirstEnergy Corp, Ford Motor Co, Fortive Corp, Garmin Ltd, GE HealthCare Technologies Inc, Generac Holdings Inc, Hershey Co/The, Hologic Inc, Host Hotels & Resorts Inc, Humana Inc, IDEX Corp, Illinois Tool Works Inc, Invitation Homes Inc, Kraft Heinz Co/The, Lam Research Corp, Meta Platforms Inc, MGM Resorts International, Microsoft Corp, Mid-America Apartment Communities, Old Dominion Freight Line Inc, Prudential Financial Inc, PTC Inc, Public Storage, QUALCOMM Inc, Smurfit WestRock PLC, Trane Technologies PLC, Tyler Technologies Inc, UDR Inc, Ventas Inc, Verisk Analytics Inc, VICI Properties Inc, WEC Energy Group Inc, Western Digital Corp.
- The peak of earnings season this week included major tech companies like Microsoft, Meta, Apple, and Amazon, collectively representing over $11 trillion in market capitalization.
- Market direction greatly depends on these companies' Q2 results, as their financial performance has a significant impact on the technology sector.
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