Here are the 3 big things we’re watching in the stock market this week
The common thread linking this week’s biggest market events is the state of the U.S. economy. The biggest day is Tuesday, when the nation’s largest banks — JPMorgan , Bank of America and Citigroup , along with Club names Wells Fargo and Goldman Sachs — mark the start of second-quarter earnings season. As if that wasn’t enough, the June consumer price index report is due out at 8:30 a.m. ET Tuesday, precisely when JPMorgan’s influential conference call, led by CEO Jamie Dimon, is scheduled to begin. Across the rest of the week, non-banks with key insights into the economy and consumer behavior also deliver earnings, most notably trucking firm J.B. Hunt , Netflix , and United Airlines . The economic calendar also features a second inflation report — the wholesale producer price index — among other smaller updates. Let us not forget Club name Johnson & Johnson reports Wednesday morning, and our July Monthly Meeting is set for noon ET Thursday. Now, let’s take a closer look at what to expect from our portfolio names and the inflation data. 1. Bank earnings: While macroeconomic reports are important in helping to better understand the economy at a higher level, nothing compares to the real-time commentary we receive on post-earnings conference calls. That is even more true when it comes to the banks. While all banks can, of course, provide information on their own operations, the larger ones — those in which we are invested — have unique insight into the global economy, given how much money flows through them on a daily, weekly, and quarterly basis. That flow of money can provide incredible insight into every level of economic activity. Both Wells Fargo and Goldman Sachs report before the bell Tuesday. Wells Fargo’s conference call kicks off at 10 a.m. ET. Goldman starts a half hour earlier at 9:30 a.m. ET. For both banks — and, honestly, this goes for the rest of earnings season as well — we’re interested in hearing about any quantifiable gains management is seeing from artificial intelligence implementation. We also want their thinking on AI spending levels as companies increasingly look to optimize their compute bills, shifting away from a blank-check attitude, known as “tokenmaxxing.” Our latest Club Check-in video explores this shift. Between the two, Wells Fargo should be able to give us a bit more insight on the state of the consumer. Goldman Sachs should be able to provide a closer look at the state of corporate M & A and funding activities, such as the IPO pipeline, interest among public companies to raise debt or sell equity, and the market’s willingness to fund those initiatives. This is a pivotal quarter for Wells, as far as our investment in the stock is concerned. After back-to-back disappointing quarters, we need to see the bank get back to beating Wall Street estimates. Along those lines, management must instill confidence that it’s still on a clear path to deliver solid top-line growth, with return on tangible common equity (ROTCE) performance continuing to track to a sustainable 17% to 18% range). ROTCE is a key metric used to evaluate how well a bank uses its equity capital to generate profits. Additionally, Wells’ efficiency ratio — operating expenses divided by net revenue — will be closely watched because it has trended in the wrong direction over the past two quarters. Revenue: $21.8 billion Earnings per share: $1.72 For Goldman Sachs, the revenue backdrop is clearly strong, given the plethora of deals, IPOs, and funding initiatives undertaken by corporations through the first half of the year. Most notably, Goldman led SpaceX’s record-breaking IPO, which occurred in the second quarter and will be included in Tuesday’s investment banking numbers. As a result, much of the focus will be on operational performance that points to sustainable ROTCE and earnings growth throughout the business cycle. Put another way, investors want to better understand how Goldman Sachs will perform in a normalized environment, not only when IPO and M & A activity heats up. ROTCE performance also tends to be what investors look at when determining what price-to-earnings multiple to assign to a financial stock. Revenue: $16.1 billion Earnings per share: $14.39 2. J & J earnings: Johnson & Johnson enters its earnings week hovering near all-time highs, thanks to a strong multiweek rally across the healthcare group. No doubt, some of J & J’s strength is owed to the market’s broader rotation into healthcare and away from red-hot AI stocks. But now, Wednesday’s earnings report offers J & J a chance to show that its business warrants owning the stock for fundamental reasons. The flipside is that the rally raises the bar and could invite profit-taking, especially because the management team of CFO Joe Wolk and CEO Joaquin Duato isn’t a promotional duo. Wolk, in particular, can be conservative with his forward guidance. Nevertheless, there’s a lot to like about the J & J story as growth accelerates, driven by a healthy pipeline and commercial slate. The big drugs to watch for the quarter are blood-cancer therapy Darzalex and Tremfya, an injectable treatment for autoimmune conditions that affect the skin, such as plaque psoriasis, and the digestive tract, such as Crohn’s disease and ulcerative colitis. Investors also want updates on the launch of Icotyde , a daily psoriasis pill approved by U.S. regulators in March; it’s among J & J’s most exciting new products to drive growth in the coming years. To be sure, analysts at Goldman Sachs told last clients last week they don’t expect J & J to disclose an Icotyde revenue figure, “consistent with the company’s reporting practice for early launches.” Instead, the focus will be on prescription numbers and the kind of patients taking it. For J & J’s medical devices segment, the leading growth drivers are heart-health products for cardiovascular disease treatment from Shockwave, which was acquired in 2024 , and Impella heart pumps. Keep in mind: J & J’s pharma business is larger and faster-growing ($15.4 billion in sales and 7.4% organic growth last quarter) than its medical devices business ($8.6 billion and 4.6% organic growth). Here’s what the Street is expecting on the top and bottom lines: Revenue: $25.05 billion Earnings per share: $2.85 3. Economic data: The biggest reports of the week are Tuesday morning’s consumer price index report and Wednesday morning’s producer price index. Both are for June. The inflation picture matters a great deal for the Federal Reserve’s interest rate decisions in the coming months and into early next year. Thankfully, the steep decline in oil prices throughout the month of June eases some of the energy-led inflationary pressure on the U.S. economy — with WTI crude falling from the low $90s per barrel in early June to just below $70 by month-end. The caveat is that the reason for the decline (an interim peace agreement between the U.S. and Iran, which led to a partial reopening of the Strait of Hormuz) got a little muddier last week as tensions between the two sides heated back up; in response, tanker traffic through Hormuz slowed . Missiles and drones continued to fly over the weekend . So while we hope the June CPI report cooled from the 4.2% annual increase in May, what happens to oil prices going forward matters more to our view of inflation than this backward-looking data. For the CPI, as of Friday, economists polled by FactSet expect a 3.8% annual increase and a 0.2% month-over-month decline. The PPI, meanwhile, is considered a leading indicator for consumer inflation because it measures the prices that producers receive for their goods. If companies are paying more for their inputs, such as steel, they may look to pass those higher costs on to finished goods down the road. PPI is expected to show a 6.2% annual increase and a 0.2% monthly decline, according to FactSet on Friday. A few other economic reports to briefly mention: retail sales data for June helps us understand where consumers were spending their money, while Friday’s housing starts data is relevant to our Home Depot position. The Federal Reserve’s monthly look at industrial production and capacity utilization is also due out Friday, and the level of industrial activity in the country matters for Club name FedEx Freight . The more stuff being made, the better for FedEx Freight as North America’s largest shipping provider of less-than-truckload services, which consolidates multiple customer shipments onto a single trailer. Week ahead Monday, July 13 Before the bell: No reports of note After the bell: AeroGrow International (AERO) Tuesday, July 14 Before the bell: Goldman Sachs (GS), Wells Fargo (EFC) , Citigroup (C), JPMorgan (JPM), Bank of America (BAC), Fastenal (FAST), Ericsson (ERIC) After the bell: Wednesday, July 15 Before the bell: Johnson & Johnson (JNJ) , ASML (ASML), Progressive (PGR), BlackRock (BLK), Conagra (CAG), Morgan Stanley (MS), Cintas (CTAS), PNC Financial (PNC), BNY Mellon (BNY), M & T Bank (MTB) After the bell: United Airlines (UAL), JB Hunt (JBHT) Thursday, July 16 Before the bell: UnitedHealth (UNH), Taiwan Semi (TSMC), GE Aerospace (GE), Abbott (ABT), Citizens Financial (CFG), State Street (STT), Prologis (PLD) After the bell: Netflix (NFLX), Alcoa (AA), Intuitive Surgical (ISRG) Friday, July 17 Before the bell: Regions Financial (RF), Truist Financial (TFC), Fifth Third Bancorp (FITB), Autoliv (ALV), Travelers (TRV) After the bell: No reports of note (Jim Cramer’s Charitable Trust is long GS, WFC, JNJ, HD and FXDF. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.