What happened last week…
Meeting minutes were released from the Federal Reserve’s June gathering where interest rates were kept at 4.25% to 4.50%. According to the minutes, “The Committee was well positioned to wait for more clarity on the outlook for inflation and economic activity.”
Furthermore, “Most participants assessed that some reduction in the target range for the federal funds rate this year would likely be appropriate.” The minutes also stated, “A couple of participants noted that, if the data evolve in line with their expectations, they would be open to considering a reduction in the target range for the policy rate as soon as at the next meeting.” The next Federal Open Market Committee meeting takes place on July 29-30. According to the CME FedWatch Tool, as of July 11, there is a 93.3% probability that rates will remain unchanged.
Tariffs that were announced in April, then later delayed to July 9 as part of a 90-day pause, will now take effect on August 1. Select countries were notified of new tariff rates that would be implemented if a trade deal is not agreed upon. When asked about the new deadline, President Donald Trump said, “I would say firm, but not 100% firm. If they call up and they say we'd like to do something a different way, we're going to be open to that.”
CoreWeave (CRWV) will purchase Core Scientific (CORZ), a data center infrastructure provider, for about $9 billion in an all-stock deal. According to the announcement, the deal will result in the “elimination of over $10 billion of cumulative future lease overhead.” The deal is expected to close by the end of the year.
Merck (MRK) has agreed to buy Verona Pharma (VRNA), a biopharmaceutical company that specializes in respiratory diseases, for approximately $10 billion. The deal is expected to finalize by the end of 2025.
Earnings season has begun, with 4% of S&P 500 companies reporting results, as of July 11. According to FactSet, as of July 3, for Q2 2025, the estimated year-over-year earnings growth rate for the S&P 500 is 5.0%, while the estimated revenue growth rate is 4.2%, which would be the 19th consecutive quarter of revenue growth for the index.
Happening this week…
The following companies report earnings this week: JPM, JNJ, PNC, NFLX, PEP.
On Tuesday, the inflation rate year-over-year for June is expected to be 2.6%. Meanwhile, the core inflation rate year-over-year for June is expected to be 2.9%.
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- The Rockline Team
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