Jul 23, 2021
The earnings-driven rebound in equities continued for a third day on Thursday with the S&P 500 gaining about 0.2% at the end of the day. While fears of systemic shortages and Rising inflation have been stoked, the over-reaching theme of the season is that results are better than expected and guidance is being raised. With the absolute peak of the earnings season set to begin next week, it looks like the indices will move up to set new all-time highs within days.
The market's mettle will be tested in more ways than one next week. Along with the deluge of earnings reports are a raft of economic releases including the monthly personal income and spending data. Within the personal income and spending, data is the PCE price index, the Fed's preferred tool for measuring inflation. The third month of hotter than expected inflation may not send the market reeling but it will raise the stakes for market bulls.