THIS week on Wall Street could be a summer blockbuster, with the roster featuring a triple bill: the Fed, jobs and earnings.
Of the three, the Federal Reserve has the most potential to upset the market. The Federal Open Market Committee is expected to release a statement on Wednesday after a two-day meeting.
Fed chairman Ben Bernanke jolted markets in late May by saying the US central bank planned to ease back on its stimulus efforts once the economy improves. Investors have been glued to his every comment since then.
Friday will bring the Labor Department’s July employment report. The job market’s recovery is seen as key to the future of Fed policy. The Fed has said it will keep interest rates at historic lows, where they have been for more than four years, until the US unemployment rate drops to 6.5 per cent.
Employers are expected to have added 185,000 jobs to their payrolls in July, according to economists polled by Reuters. That’s slightly below June’s count of 195,000 new positions.
The US unemployment rate is expected to dip to 7.5 per cent in July from 7.6 per cent in June.
With results already in from 259 of the S&P 500 companies, the earnings season is now in its second half.
But this week will still be one of the heaviest of the season, with 131 names from a wide range of industries due to report results, including Time Warner Cable, Chevron, Coach, US Steel and Allstate.
Stronger-than-expected results since the start of the season have pushed up the growth estimate for the quarter. Second-quarter earnings are now expected to have increased 4.1 per cent, up from an estimate of 2.8 per cent a week ago.