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The Fed is expected to keep rates steady, but Powell will get questions on Fed independence. (0:18) Apple, Microsoft, Meta and Amazon report earnings. (2:37) U.S. and EU announce trade deal (3:44)
The following is an abridged transcript:
It would be hard to find a bigger week for Wall Street with the Federal Reserve meeting on rates and four of the Magnificent 7 stocks reporting earnings.
As far as the markets are concerned, the FOMC decision is a foregone conclusion. Fed funds futures price in a 98% chance that Chairman Jay Powell and company keep rates on hold.
But the press conference will be a barn burner as President Donald Trump continues to pressure the Fed chief to lower rates, holding the possibility of firing Powell over his head like the Sword of Damocles. Trump even made a rare visit to the Fed itself, ostensibly to discuss renovation costs overruns, an avenue the White House has floated as a backdoor way to fire Powell. But that meeting left little impact on the market, although it did amuse financial Twitter when Powell had to correct Trump on his costs figures in a scene may likened to The Office.
Wall Street has seen some volatility over concerns about the Fed losing independence but every time the long end of the curve spikes, Treasury Secretary Scott Bessent comes out and assures traders that Powell won’t be fired.
Maybe Trump is finding out that firing a Fed chairman without market consequences is not easy, just like he said about his plan to break up Nvidia (NVDA).
UBS Chief Economist Paul Donovan says; “US Commerce Secretary Lutnick suggested US rates should be cut now, and Federal Reserve Chair Powell should resign or be fired. Do investors want to live in a world where Fed independence is compromised and Lutnick influences policy? To judge from the dollar’s reaction, the answer is ‘no’.’
“Two problems emerge from casting the Fed as a scapegoat for coming economic problems. Fed attacks mean supporting rate cuts (for legitimate economic reasons) might create the perception of being a political puppet. Even if the Fed remains independent, its reputation for independence is undermined—and reputations take years to rebuild. An independent central bank is not an absolute requirement for reserve currency status, but it helps- and the US is now suffering on this category.”
Deutsche Bank’s Henry Allen notes that “markets are pricing more than 100bps of Fed cuts between now and August 2026, on top of the 100bps already delivered between September and December 2024. If realized, that would total just over 200bps of cuts over two years.”
“History suggests that 200bps of cuts in two years has almost always required a recession,” he added. “The only exception in recent decades was the mid-1980s, when Volcker cut rates sharply from very elevated levels as inflation fell. That period was unique in how restrictive policy had become. In every other case, an easing on this scale came alongside a recession — something risk markets are not currently pricing.”
On the earnings front, Microsoft (NASDAQ:MSFT) and Meta (META) report on Wednesday and Apple (NASDAQ:AAPL) and Amazon (AMZN) weigh in on Thursday.
Apple is expected to report EPS of $1.43 on revenue of $88.89 billion. Analysts expect investor attention to center on the continued strength of subscription and service revenue. While there are concerns about slowing iPhone growth, the long-term investment story is increasingly shifting toward services.
For Microsoft, analysts expect EPS of $3.38 on revenue of $73.8 billion. Earnings are expected to be driven by rapid AI adoption across its product ecosystem, continued strength in cloud services and substantial investment in data center infrastructure. Looking ahead, investors will closely watch the pace of AI integration into core platforms like Azure, Office and GitHub, as well as the company’s ability to convert AI-driven demand into recurring revenue.
Also on the earnings calendar:
Waste Management (WM) and Nucor (NUE) report Monday.
Visa (V), Procter & Gamble (PG), UnitedHealth (UNH), Boeing (BA) and PayPal (PYPL) issue numbers on Tuesday.
Joining Microsoft and Meta on Wednesday are Qualcomm (QCOM), Robinhood (HOOD) and eBay (EBAY).
Mastercard (MA) is up along with Apple and Amazon on Thursday.
Exxon Mobil (XOM) and Chevron (CVX) report Friday.
In the news this weekend, the United States and the European Union reached a last-minute agreement that will subject most EU exports to a 15% tariff, narrowly averting a broader trade conflict that could have shaken the global economy.
The announcement comes just days ahead of a previously set Friday deadline, when significantly higher tariffs were scheduled to take effect. Trump had initially proposed a 50% tariff on nearly all EU imports back in May before reducing that figure to 30%, prompting a sprint in negotiations.
A new Wall Street Journal poll reveals that most Americans believe Trump’s recent tax-and-spending law favors the wealthy and large corporations at the expense of low-income families. Only 42% support the legislation, while 52% oppose it, worse than Trump’s own approval rating.
The law, signed on July 4, extends Trump-era tax cuts, introduces new tax breaks and reduces projected spending on programs like Medicaid and food assistance. Although it provides short-term benefits such as larger paychecks and tax refunds, it’s also projected to add $3.4 trillion to the deficit over the next decade, according to the Congressional Budget Office.
Shortly after the FDA announced an investigation into the death of a patient who had received Elevidys, a gene therapy developed by Sarepta Therapeutics (SRPT), the company said that the death reported in Brazil is unrelated to its treatment.
It added that its Swiss partner Roche (OTCQX:RHHBY), which markets Elevidys outside the U.S., has also declared that the death was not related to Elevidys.
And for income investors, Bank of Montreal (BMO) goes ex-dividend on Wednesday, paying out on August 26.
Delta Air Lines (DAL) and Morgan Stanley (MS) go ex-dividend on Thursday. Delta pays out on August 21 and Morgan Stanley pays out on August 15.
Costco goes ex-dividend on Friday, with a payout date of August 15.
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