TLDR
- Federal Reserve expected to hold interest rates at 4.25%-4.5% on Wednesday amid political pressure from Trump
- Major companies reporting earnings include Palantir, AMD, Ford, Disney, and Uber
- S&P 500 has recovered from losses triggered by Trump’s tariff announcements
- Fed faces balancing concerns about economic downturn against inflation risks from tariffs
- Markets anticipate at least three 25-basis point rate cuts by December, according to futures data
The Federal Reserve’s upcoming interest rate decision and a busy earnings week featuring major technology and entertainment companies are set to take center stage in financial markets this week. Following a period of market volatility triggered by President Trump’s tariff announcements, investors are closely watching for signals about the direction of monetary policy and corporate performance.
The Federal Reserve is widely expected to maintain its benchmark interest rate at the current level of 4.25%-4.5% when it announces its decision on Wednesday. This comes amid increasing political pressure from President Trump to lower rates, raising questions about central bank independence.
Despite the pressure, the Fed has indicated it wants to see more economic data before making rate changes. According to CME Group’s FedWatch tool, investors don’t expect a rate cut at this meeting.
The central bank got encouraging inflation news last week when March’s inflation rate aligned with expectations, though still above target. Friday’s jobs report showed U.S. employers added more jobs than expected in April, with employment increasing by 177,000 jobs.
Market pricing shows expectations for potential rate cuts as soon as June, with futures data indicating at least three 25-basis point cuts anticipated by December, according to LSEG data. However, the strong jobs report reduced the odds of near-term cuts.
Corporate Earnings in Focus
The week kicks off with Ford reporting earnings on Monday as the automaker deals with pressure from Trump’s automobile tariffs. Palantir is also scheduled to report after market close on Monday, potentially providing insights into demand for artificial intelligence software.
Advanced Micro Devices will report on Tuesday as the semiconductor industry faces challenges from tightening trade restrictions on exports to China. AMD previously stated these restrictions could result in $800 million in costs.
Wednesday brings reports from ride-hailing company Uber, Danish pharmaceutical firm Novo Nordisk, and entertainment giant Disney. Disney’s report follows a better-than-expected quarter as it continues developing its streaming service, even as it reportedly laid off about 6% of its news and cable TV divisions.
Other companies reporting this week include cryptocurrency exchange Coinbase, e-commerce platform Shopify, brewer Anheuser-Busch InBev, energy firms ConocoPhillips and Occidental Petroleum, delivery service DoorDash, online used car retailer Carvana and video game maker Electronic Arts.
Market Recovery and Trade Developments
The S&P 500 has shown a strong recovery recently, erasing the slump triggered by President Trump’s “Liberation Day” tariff announcement on April 2. After nine consecutive sessions of gains – the longest streak since 2004 – the index was up 0.3% since the tariff announcement.
Despite this recovery, the S&P 500 remains 7.5% below its February record high. In April, the benchmark index had dropped nearly 20% from that peak.
Corporate earnings have generally exceeded expectations during this reporting season. With about two-thirds of S&P 500 companies having reported, businesses are posting earnings 7% above expectations compared to a long-term average of 4.3%, according to LSEG IBES data.
Trade developments remain a focus for investors, with market optimism tied to signs of easing tensions. On April 9, Trump paused hefty import levies on many countries for 90 days to allow for negotiations, a move that sent stocks soaring.
Investors will also monitor key economic data releases this week, including trade balance figures on Tuesday and initial jobless claims on Thursday. Wednesday’s scheduled report on consumer credit will help economists evaluate consumer health amid faltering confidence, while Thursday’s wholesale inventories report could provide insight on supply chain resilience.
The Federal Reserve’s blackout period ends Friday with an event featuring several Fed officials, including Governors Lisa Cook and Christopher Waller, along with former Fed Governor Kevin Warsh, a key Trump adviser who has been mentioned as a potential successor to Powell.
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