Dear traders, dear stock market friends.
The Dow Jones made history last week, surpassing the 53,000-point mark for the first time. However, after a four-week rally, the Dow ran out of steam somewhat toward the end of the week. New inflation concerns, rising bond yields, and renewed geopolitical tensions triggered profit-taking and led to a 0.5% decline in the closing price for the week. Nevertheless, the long-term uptrend remains intact. This week, the focus is likely to shift primarily to U.S. inflation data and the start of earnings season.
Dow Jones Ends Four-Week Winning Streak
After four weeks of rising prices, the Dow Jones initially gained again at the start of the past trading week, reaching levels above 53,000 points for the first time in its history. However, a correction occurred later in the week.
The market was primarily burdened by renewed inflation concerns and geopolitical tensions in the Middle East, which temporarily sent oil prices significantly higher. Higher energy prices could intensify inflationary pressure and force the US Federal Reserve to maintain its restrictive course for longer.
Inflation data in focus
Last week, the minutes of the most recent Fed meeting were released, showing that several members continue to see a high risk that price pressures could remain more persistent than recently expected.
Accordingly, yields on 10-year U.S. Treasury bonds also rose at times back to around 4.6 %. Higher bond yields pose headwinds for the stock market in particular, as they increase financing costs while simultaneously making bonds a more attractive investment alternative.
Inflation and related expectations about the Fed's interest rate policy therefore remain one of the most important topics currently. This week, further important inflation data are on the agenda that could provide new impetus:
On Tuesday, July 14, the Consumer Price Index (CPI) for June will be released. Analysts expect annual inflation to decline to around 3.9 %, down from 4.2 % in May. Compared to the previous month, the overall index is even expected to fall slightly by 0.1 %. That would be the first negative monthly reading in a long time. However, this decline would be almost entirely due to the plunge in energy prices following the ceasefire in mid-June and says little about underlying price pressures.
That is precisely why the central bank is likely to focus on the core rate, which excludes energy and food. Here, analysts expect a 0.3 % increase from the previous month, which would keep the annual rate at around 2.9 %—exactly the same level as twelve months ago. So there is certainly no sign of a sustained easing.
Just one day later, on Wednesday, July 15, the Producer Price Index (PPI) will be released, which is often considered a leading indicator of future inflationary pressure. Following the jump to 6.5 % year-over-year in May (the sharpest increase since November 2022), the PPI is also likely to be of great interest.
If current inflation data comes in higher than expected, it would drive interest rate expectations higher again, thus exerting additional pressure on the stock market. Conversely, weaker inflation data could strengthen hopes for a less restrictive course from the Federal Reserve.
Start of Q2 earnings season
In addition to inflation data, the second quarter earnings season also begins this week. Traditionally, the major US banks kick off the earnings season and often provide the first indications of the condition of the US economy.
On Tuesday, JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, and Wells Fargo, among others, will publish their results. On Wednesday, Morgan Stanley and Johnson & Johnson will follow, before UnitedHealth, another important Dow Jones stock, presents its figures on Thursday.
In the following weeks, the reporting season will continue to gain momentum. From the Dow Jones, the quarterly figures from IBM, Coca-Cola, Visa, American Express, Microsoft, Apple, Amazon, Procter & Gamble, Merck, Chevron, McDonald’s, Boeing, and Walt Disney are still on the agenda, among others.
Expectations for the earnings season, however, are very high. According to FactSet estimates, analysts expect S&P 500 companies to report earnings growth of 23.6 % compared with the same quarter a year ago. That would mark the second consecutive quarter with growth of more than 20 %.
The direction of the revisions is particularly striking: At the end of March, the expected growth rate was still 18.8 %. Analysts have thus significantly raised their estimates over the course of the quarter, which is rather atypical; normally, earnings forecasts are revised downward over the course of a quarter, by an average of about 2 % over the past five years. Revenue is also expected to grow by 12.2 %, the highest figure since the second quarter of 2022. The upward revisions are driven primarily by the energy and technology sectors.
Since experience shows that actual reported earnings very often exceed estimates, FactSet considers earnings growth of over 29 % at the end of the earnings season to be likely. That would be the strongest figure since the fourth quarter of 2021.
On the one hand, strong corporate profits provide the fundamental justification for the current record highs; on the other hand, the bar is also set extremely high: with a valuation close to 20 times expected earnings, little room for disappointment is priced in.
Author: Tobias Schmid
Date: 07/13/2026
