In partnership with

Before the bell

Market Highlights

• Inflation Trends: The consumer price index (CPI) inflation for June showed a cooler-than-expected increase, with an annual rise of 3.0%, below both last month's 3.3% and forecasts of 3.1%. This moderation in inflation supported the notion of a continuing disinflation trend.

• Federal Reserve Policy: Despite the softer inflation data, Fed Chair Jerome Powell reiterated the need for more favorable inflation data before the Federal Reserve would consider cutting interest rates. Markets speculated about potential rate cuts in 2024, with an increased probability for a rate cut at the September meeting.

• Economic Signals: The NFIB Small Business Index climbed to 91.5, marking the highest reading of the year, yet it remained below the 30-year average, indicating improving but still low small-business optimism. Additionally, recent economic data suggested the economy might be slowing, which could influence the Fed's future policy decisions.

All your news. None of the bias.

Be the smartest person in the room by reading 1440! Dive into 1440, where 3.5 million readers find their daily, fact-based news fix. We navigate through 100+ sources to deliver a comprehensive roundup from every corner of the internet – politics, global events, business, and culture, all in a quick, 5-minute newsletter. It's completely free and devoid of bias or political influence, ensuring you get the facts straight.

Subscribe to 1440 today.

Notable Earnings

• PepsiCo: PepsiCo delivered strong earnings, showcasing robust growth in both its snack and beverage segments. The company's strategic focus on product innovation, such as introducing healthier product lines and expanding its portfolio of low-sugar beverages, significantly contributed to its financial performance. Additionally, PepsiCo's international markets continued to show strength, with increased market penetration and successful marketing campaigns driving sales. The company's effective cost management and supply chain efficiencies also played a crucial role in exceeding market expectations, highlighting PepsiCo's resilience and adaptability in a competitive market environment.

• Delta Air Lines: Delta Air Lines reported solid earnings, reflecting a significant recovery in travel demand as global travel restrictions eased. The airline saw substantial increases in both domestic and international passenger traffic, bolstered by strategic cost management and operational efficiencies. Delta's initiatives to enhance customer experience, such as improved in-flight services and expanded route offerings, contributed to its positive financial performance. Additionally, the airline benefited from a strong cargo business, which helped offset some of the challenges faced during the pandemic. Delta's ability to adapt to changing market conditions and its focus on maintaining a strong balance sheet were key factors in its successful earnings report.

• Walgreens Boots Alliance: Walgreens Boots Alliance released impressive earnings, driven by growth in its retail pharmacy and healthcare services segments. The company's efforts to expand its healthcare offerings, including the rollout of new health and wellness services and the integration of digital health solutions, significantly contributed to its financial success. Walgreens also saw increased foot traffic in its stores, aided by strategic partnerships and targeted marketing campaigns. The company's focus on improving customer engagement through loyalty programs and personalized services helped enhance its market position. Additionally, Walgreens' cost-saving initiatives and efficient supply chain management played vital roles in exceeding market expectations and delivering strong earnings

The graph titled "Equity outlook" projects earnings growth across various sectors by the fourth quarter (Q4), indicating that growth should extend beyond the technology sector. Financials lead the way with a remarkable anticipated earnings growth of 41.0%, suggesting significant improvements and strong performance in this sector. Health care and materials follow with expected growth rates of 23.7% and 21.5%, respectively, highlighting the potential for robust gains in these areas. Consumer discretionary and communication services sectors are both forecasted to achieve 17.0% growth, aligning with the overall S&P 500 index. Information technology, typically a dominant sector, shows a projected growth of 15.9%, indicating solid but relatively lower gains compared to other sectors. Utilities and real estate are set to grow by 14.6% and 11.4%, respectively, while industrials and consumer staples are expected to see moderate growth of 7.0% and 6.1%. The energy sector lags significantly with a meager projected growth of 0.7%. This diverse outlook underscores the broadening of earnings growth across multiple sectors, reflecting a more balanced market expansion beyond the traditional tech-driven gains.

Outlook Snapshot: The Week Ahead

As we move into the next week, several critical events are poised to shape market sentiment and economic outlooks. Investors are keenly anticipating the consumer price index (CPI) report due on Thursday, which will provide further clarity on the inflation trajectory. The producer price index (PPI), scheduled for release the following day, will offer additional insights into price trends within the supply chain. Core CPI is expected to remain around 3.4%, matching the previous month's figure and marking the lowest level since early 2021. Any deviations from this forecast could trigger significant market reactions, solidifying expectations for the Federal Reserve's policy moves in September. Additionally, the upcoming week is backloaded with the start of the second-quarter corporate earnings announcements, featuring reports from major U.S. banks and tech giants. Market participants will closely analyze these earnings to gauge the health of various sectors and the broader economy. Furthermore, Fed Chair Powell's midweek testimony will be scrutinized for any hints regarding the timing and likelihood of rate cuts. Overall, the interplay between economic data and corporate earnings will be crucial in determining market direction in the coming days.