Fed Rate Cut is Likely This Week

July 29, 2019
504 Views

Today marks the start of a big week for investors. Earnings season is in full swing, and there’s positive sentiment in the market that the Fed will cut interest rates before Friday.

Here’s everything that investors need to know as Monday trading begins.

Trade Talks are Restarting

More than a year of tension has left the Chinese and U.S. trade relationship at a low point. However, both nations have agreed to continue negotiations in good faith, and talks will resume on Tuesday.

There’s currently a tariff truce in effect, with Donald Trump and Xi Jinping agreeing to hold any pending tariffs for as long as negotiations are ongoing.

There’s still the issue of intellectual property protections that need to be discussed. Negotiations will at least keep some fear out of equity markets in the short term.

There’s More Confidence in Europe

The U.K. could face a no-deal Brexit scenario, but this isn’t worrying some businesses. The London Stock Exchange is currently discussing a deal to purchase Refinitiv, a major financial data company. The deal could be worth up to $27 billion.

There are also rumors that Pfizer (NYSE: PFE) could be nearing a merger or partnership deal with U.K. based Mylan (NASDAQ: MYL), which would create one of the largest pharmaceutical entities in the world.

Brexit could still rattle the markets, but, for now, investors in the U.K. have a lot of confidence.

The Fed Could Announce a Rate Cut on Wednesday

The Federal Reserve will meet on Tuesday and Wednesday to discuss monetary policy for the rest of the year. The Wall Street consensus is that the Fed will announce a rate cut this week. Even if the cut is only a quarter point, it could still send the market into a strong rally for the rest of the summer.

A lower rate would also make mortgages more competitive, which could reinvigorate the home market.

These Major Companies Will Release Earnings Data

We’re right in the middle of earnings season. This is the perfect time to review portfolios and consider new stocks based on Q2 revenue and full year forecasts.

  • Apple (NASDAQ: AAPL) will release earnings data on Tuesday. Under Armour (NYSE: UA) and Procter & Gamble (NYSE: PG) will also report on the same day.
  • Qualcomm (NASDAQ: QCOM) will report earnings on Wednesday. Its financial results will reflect on the entire chipset industry, so expect to see some movement towards the end of the week.
  • Exxon (NYSE: XOM) and Chevron (NYSE: CVX) will report on Friday. Earnings will bring insights into the current state of the energy sector.

U.S. stock market futures were up on Monday, indicating confidence for the week ahead. As always, perform due diligence before buying or selling stocks this week. Every financial decision should be carefully considered within the context of the current data and the strength of your portfolio as a whole.

 

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