Stocks head into August with a tailwind, as investors await jobs data and a slew of earnings

From Caterpillar to Amgen, dozens of large companies report earnings in the coming week, but it may be big economic data, such as Friday’s jobs report, that takes over as a major market catalyst.

Monthly employment reports are always important, but the next few may be even more so. Federal Reserve Chair Jerome Powell made it clear at his press briefing Wednesday that the Fed’s September rate decision will depend on economic data.

Stocks rallied in the past week, helped by better-than-expected earnings reports and a view that the Federal Reserve may not be as aggressive as it forecast when it comes to interest rate hikes.

The major stock market indexes ended July with their best monthly performance of the year, and the S&P 500 and Dow scored their best months since November 2020. The Nasdaq’s 12.3% gain was its best monthly performance since April 2020.

The S&P was up 4.3% for the week and 9.1% for the month of July. It is still down 13.3% for the year. The Nasdaq was up 4.7% for the week. The Dow was up nearly 3% for the week and 6.7% for the month.

“Earnings stink, but they’re not as bad as they could have been,” said Sam Stovall, chief investment strategist at CFRA. “The Fed raised rates the most aggressively since 1981, but that’s good because the economy is slowing down, and that’s good because the Fed might start tapering its tone.”

Some of the biggest names in tech delivered earnings beats in the past week, and their stocks were higher, such as Apple, Microsoft and Amazon. There have also been some big misses and negative forecasts, like from Meta Platforms and Intel. Intel was down 8.6% Friday after its earnings miss and lowered forecast.

“Thus far the market has been able to digest it,” said Art Hogan, chief investment strategist at National Securities. “A lot of this is better than feared. If that process continues, it’s likely to help the market grind higher. The market seems to be sitting on this notion that we had priced in Armageddon and thus far, that has not been thrust upon us.”

Hogan said many investors were caught underinvested or even short stocks during the July rally.
“That helps throw some gasoline on the fire,” he said.

In the week ahead, there are 148 S&P 500 companies reporting earnings. Reports come from a diverse group of companies, such as health-care names Eli Lilly, Gilead Sciences and Amgen. There will also be reports from travel-related companies, such as Uber and Booking Holdings.

Stocks enter August riding the optimism of July,…