"Super Week" is coming! Federal Reserve decision + earnings reports from the four giants + non-farm payrolls, the US stock market will face a "judgment moment" to set the tone for the second half of the year

According to the Zhitong Finance APP, Wall Street professionals are closely watching the upcoming critical week, which is likely to set the tone for the U.S. stock market and economic direction for the remainder of the year. The primary event will be the conclusion of the Federal Reserve meeting on Wednesday. Although a rate cut is not expected at this meeting, traders and investors will carefully analyze the meeting comments for clues about future policy paths. Following that, a number of tech giants will release their earnings reports, including Amazon (AMZN.US), Apple (AAPL.US), Meta (META.US), and Microsoft (MSFT.US). Additionally, there will be a series of key indicators reflecting economic conditions throughout the week, ranging from U.S. Gross Domestic Product (GDP) to non-farm payroll data.

In other words, if there are five days that could determine the direction for the second half of the year, it is this week.

"This week's schedule is packed—trade negotiations, the Federal Open Market Committee (FOMC) meeting, employment reports, and earnings reports from four of the 'seven tech giants'—this is undoubtedly the market's 'judgment moment,'" said Julian Emanuel, Chief Equity and Quantitative Strategist at Evercore ISI. The FOMC is the body within the Federal Reserve responsible for setting interest rates.

The massive influx of information will test investors' confidence in the resilience of the U.S. economy and the seemingly unstoppable upward trend of the stock market. Coupled with the August 1 tariff deadline set by Donald Trump (who has indicated he will not extend it), the market hopes to see some signs of stability from the trade negotiations after months of extreme volatility.

"I think the market is more likely to clarify that the economy will continue to remain resilient, but in terms of trade, the clarity we can obtain is lower," said Kevin Gordon, Senior Investment Strategist at Charles Schwab. "The deadlines for 'reciprocal tariffs' on some major trading partners are staggered, and there are still unresolved issues in the announced agreement framework, so I don't think August 1 is a magical day that will eliminate tariff anxiety."

Bloomberg Intelligence data shows that S&P 500 constituent companies overall exceeded expectations, with profits growing 4.5% compared to the same period last year. Companies like Southwest Airlines (which stated that tariffs have reduced its pre-tax profits by $1 billion this year) expect conditions to improve in the second half of the year. "We have seen signs of a rebound in passenger demand," said CEO Bob Jordan in an interview.

The momentum for profit growth largely comes from wealthier consumers. American Airlines emphasized strong demand for its premium cabins, while Deckers Outdoor Corporation mentioned the hot sales of high-priced footwear such as UGG sheepskin boots and Hoka sneakers. United Airlines and Delta Air Lines stated that corporate travel is the main driver of their recovery.

On the other hand, Chipotle Mexican Grill (CMG.US) lowered its earnings expectations, with CEO Scott Boatwright stating that "low-income consumers are under pressure," leading to decreased spending.

Other signs of pressure are emerging, with companies like ConAgra Foods and Abbott Laboratories (ABT.US) mentioning that tariffs have led to rising costs. Bloomberg Intelligence strategists Gina Martin Adams and Michael Casper warned that as trade policies begin to have a tangible impact, profits for non-essential consumer goods stocks are expected to decline by early 2026 "We have seen the impact of tariffs at the individual level from comments made by some companies, as well as potential future impacts," said Dan Greenhaus, Chief Economist and Market Strategist at Solus Alternative Asset Management. "However, in fact, it may take several months before we can more precisely grasp the distribution of costs."

Economic Uncertainty Persists

As the effects of tariffs are just beginning to emerge, economic data is also showing fluctuations. The government's preliminary estimate for second-quarter GDP is expected to show a significant rebound in economic growth—previously, GDP contracted earlier this year due to a surge in imports.

"We will only know where we stand after the market and the economy have had a chance to digest the new tariff rates that took effect on Friday," said Michael O'Rourke, Chief Market Strategist at Jones Trading.

Other reports to be released this week may indicate a softening in the U.S. economy. Economists expect that, after adjusting for inflation, U.S. consumer spending in June showed almost no growth; other forecasts indicate that hiring will continue to slow and the unemployment rate will rise. They also anticipate that as tariffs begin to take effect, the inflation indicator favored by the Federal Reserve—the Personal Consumption Expenditures Price Index—will accelerate.

"This is not the cliff-like drop that most people associate with a recession, but if you take the time to delve into the underlying details, you will find that this is a clear slowdown," said Gregory Daco, Chief Economist at EY-Parthenon.

Despite various uncertainties, the stock market is at historical highs, as fears of the worst-case scenario regarding tariffs have not materialized. The question is how long this situation can last.

"I think several factors are at play. First, there are signals indicating that the labor market is performing well, with wage growth outpacing inflation—both of which generally support consumers," said Kayla Siedel, Macro Multi-Asset Strategist at State Street Bank. "As for the stock market, corporate earnings have exceeded lower expectations, indicating that companies are performing better than feared."