Investors face a week packed with major events, including earnings from four tech giants, a Federal Reserve interest rate decision, and ongoing geopolitical turmoil in the Middle East. This follows a volatile week on Wall Street. The S&P 500 closed up 0.1% on Friday but fell 0.6% for the week. The Dow Jones Industrial Average rose 0.6% on Friday but ended the week down 0.4%. The Nasdaq fell 0.6% on Friday, suffering a 2.1% weekly decline. The Dow closed at 51,947.25, up 235.65 points (0.46%) as of 17:26:43 ET on July 24.

Key Events This Week

Heavyweight Earnings: Four of the 'Magnificent Seven' Report

The main earnings focus is on four of the "Magnificent Seven" tech stocks: Microsoft and Meta on Wednesday, followed by Apple and Amazon on Thursday. Following second-quarter reports from Alphabet and Tesla, the massive question looming over these tech giants is: how much are they spending on AI? More critically, can these high expenditures translate into tangible returns on investment, and when will commercial benefits materialize? The week's earnings calendar is not limited to tech giants. On Monday, AstraZeneca kicks things off. Tuesday features SK Hynix (first report since US listing), Visa, Coca-Cola, and Boeing. Wednesday includes Lam Research, General Dynamics, Qualcomm, and Starbucks. Thursday features Mastercard, Shell, and Anheuser-Busch InBev. The week concludes Friday with energy giants Exxon Mobil and Chevron, plus AbbVie and Eaton.

Federal Reserve’s Wednesday Meeting

The Federal Reserve will announce its latest interest rate decision on Wednesday, briefly diverting market attention. The consensus is for rates to remain unchanged, with a focus on potential hikes in the autumn. However, renewed tensions in the Middle East make this meeting more consequential than last week's.

Middle East Tensions Impact Oil Prices

Last week, Houthi attacks in the Red Sea pushed Brent crude above $100 per barrel. A temporary ceasefire between the US and Iran over the weekend led to a drop in crude oil futures on Monday. However, with no concrete diplomatic solutions in place, the risk of resurgent inflation remains high.

Alphabet's Earnings Sound a Warning for Tech

Alphabet's second-quarter report served as a prelude to this earnings season. While revenue and profit exceeded expectations, with robust margins and Google Cloud revenue surging 82% year-over-year, management dramatically raised its 2026 capital expenditure forecast to $200 billion. This led to the company's first negative free cash flow since its IPO, triggering a sell-off in its stock. Torsten Slok, an analyst at Apollo Global Management, noted that the market is no longer satisfied with just "increasing investment." Investors now demand a complete profit logic. The core question has shifted to whether capital expenditure, earnings growth, and return on investment are accelerating or decelerating. A team at Deutsche Bank, led by Brad Zelnick, outlined three major concerns for Microsoft, including rising hardware costs, doubts about the long-term returns from massive AI spending, and increasing reliance on OpenAI. Deutsche Bank expects Microsoft's earnings trajectory to likely mirror that of Alphabet, forecasting a rise in 2026 capital expenditure from $215 billion to $238 billion, with free cash flow barely breaking even. The analysts noted that while the market scrutiny of spending is understandable, the risks may be overblown, and Microsoft has ample ways to offset pressure in coming quarters.

Market Calls for Fed Rate Hikes

Most institutions expect the Fed to hold rates steady this week amid mixed economic data. The labor market remains strong, with weekly initial jobless claims hitting a low not seen since 1969, according to Capital.com analyst Daniela Hathorn. Inflation data shows a month-on-month decline in CPI and PPI, but year-on-year gains remain well above the 2% target. The ongoing US-Iran conflict and renewed Houthi threats in the Red Sea raise the risk of an energy crisis. Hathorn believes the market was overly optimistic in pricing in a rapid shift to monetary easing. Cleveland Fed President Beth Hammack's LinkedIn post stirred discussion, noting that she has heard for the first time from many business leaders calling for tighter monetary policy to combat inflation, as household costs remain high. Bloomberg data shows that as of Friday morning, the market was fully pricing in a rate hike in September and another in March of the following year. Wall Street generally believes that once the Fed begins a rate hike cycle, it rarely stops after just one move, signaling a broad tightening of policy. Fed Chair Kevin Walsh's current focus is entirely on lowering inflation.

Risks in the Oil Market

Geopolitical risk is back at the center of oil pricing. The US-Iran conflict lacks a long-term solution, and even a temporary pause in attacks continues to pressure commodities. Brent crude held above $100 per barrel on Thursday, returning to the highs seen in early June before the US-Iran MOU. Jorge Leon, Head of Geopolitics at Rystad Energy, believes that if ceasefire talks fail, oil prices are likely to surge. The Strait of Hormuz remains under threat, and Ukraine continues to strike Russian refineries, pressuring Russian refining capacity. The Red Sea added new conflict last week when Houthi rebels attacked two Saudi oil tankers. The Bab el-Mandeb strait, connecting the Red Sea and the Gulf of Aden, handles an average of 9 million barrels of oil per day. A blockade could halve the total volume of crude oil exported from the Persian Gulf. Leon explained that a disruption in the Bab el-Mandeb would not only halt Saudi shipping but also severely limit the capacity of alternative routes to compensate for any shortfall from the Strait of Hormuz, drastically reducing the global oil transport system's tolerance for disruption. The oil market faces multiple challenges: adequate supply but fewer available transport routes, insufficient refining capacity, and dwindling emergency petroleum reserves that are unable to withstand a prolonged new supply disruption.

Full Economic and Earnings Calendar

Monday

Economic data: June Durable Goods Orders (estimated +1.5% month-over-month, previous -4.5%); July Dallas Fed Manufacturing Index (previous 0.0). Earnings: AstraZeneca, Vertiv, Cadence Design Systems, Nucor.

Tuesday

Economic data: ADP Weekly Employment Change (previous +16,500); June Retail Inventories (previous +0.6%); June Wholesale Inventories (previous +0.1%); May FHFA House Price Index (previous -0.1%); July Richmond Fed Manufacturing Index (previous 4); July Richmond Fed Business Conditions (previous -9); July Conference Board Consumer Confidence Index (estimated 92, previous 91.2); July Dallas Fed Services Revenue (previous 2.9). Earnings: SK Hynix, Visa, Coca-Cola, KLA, Seagate, Boeing, Rio Tinto, Corning, Unilever, S&P Global, GSK, United Parcel Service, Waste Management, Barclays, American Tower, Sherwin-Williams, Royal Caribbean, Hilton, ON Semiconductor, Bloom Energy, Teradyne, Ford, Electronic Arts, PayPal, Cigna, DTE Energy, CenterPoint Energy, Expand Energy.

Wednesday

Economic events: FOMC interest rate decision; MBA Mortgage Applications (previous +1.9%). Earnings: Microsoft, Meta, Lam Research, Procter & Gamble, Arm Holdings, Amphenol, Qualcomm, UBS, Starbucks, Vertiv, Fortinet, General Dynamics, Equinix, ADP, Robinhood, Eni, Agnico Eagle Mines, Deutsche Bank, Boston Scientific, Cheniere Energy, L3Harris Technologies, Public Storage, Entergy, Old Dominion Freight Line, Humana, Garmin, Carvana, Chipotle, CBRE Group, Teva Pharmaceutical.

Thursday

Economic data: June Personal Income (estimated +0.3% month-over-month, previous +0.7%); June Personal Consumption Expenditures (estimated +0.4%, previous +0.7%); June PCE Price Index (estimated -0.1% month-over-month, +3.6% year-over-year, previous +0.4% month-over-month, +4.1% year-over-year); Core PCE (estimated +0.1% month-over-month, +3.3% year-over-year, previous +0.3% month-over-month, +3.4% year-over-year); Initial Jobless Claims (previous 187,000); Continuing Claims (previous 1,796,000); Q2 GDP Annualized (estimated +2.3%, previous +2.1%). Earnings: Apple, Amazon, Mastercard, Shell, Anheuser-Busch, Mizuho Financial, British American Tobacco, Bristol-Myers Squibb, Stryker, Altria, Southern Company, Valero Energy, Lloyds Banking Group, KKR, Intercontinental Exchange, Cigna, American Electric Power, Monolithic Power Systems, Regeneron, Ferrari, Yum! Brands, Hershey, MicroStrategy, Roblox.

Friday

Economic data: July Chicago PMI (previous 56.7); University of Michigan Consumer Sentiment Final (previous 54.4); July Michigan 1-Year Inflation Expectations (previous +4.2%); 5-10 Year Inflation Expectations (previous +3.3%). Earnings: Exxon Mobil, Chevron, AbbVie, Linde, Eaton, Sony, Colgate-Palmolive, Imperial Oil, Dominion Energy, Cameco, Cboe Global Markets, Fortis, Ares Management, T. Rowe Price, Moderna, Avis Budget Group.