What happened last week…
In his semiannual testimony to Congress, Federal Reserve Chairman Jerome Powell appeared to signal the potential for an interest rate cut in the near-term. In prepared remarks, Powell said, “In light of the progress made both in lowering inflation and in cooling the labor market over the past two years, elevated inflation is not the only risk we face. Reducing policy restraint too late or too little could unduly weaken economic activity and employment.” The next Federal Open Market Committee meeting takes place on July 30-31. Interest rates are expected to remain at 5.25% to 5.50% but could see a 25-basis point reduction in September.
Costco (COST) will raise its membership fees for the first time since June 2017. In September, its annual membership fee will increase to $65 from $60 and its executive membership will increase to $130 from $120. The company said the fee increases will impact around 52 million memberships, a little more than half are executive memberships.
Eli Lilly (LLY) will buy biopharma company Morphic Holding (MORF) for $3.2 billion. Morphic is “developing a portfolio of oral integrin therapies for the treatment of serious chronic diseases, including autoimmune, cardiovascular, and metabolic diseases, fibrosis, and cancer.” The deal is expected to close this quarter.
Alphabet (GOOG) has reportedly ended talks to acquire marketing company HubSpot (HUBS), which has a market cap of about $24 billion. The deal would have been Alphabet’s largest ever acquisition and could have faced scrutiny from U.S. regulators.
The inflation rate year-over-year for June landed lower than expectations (3.1%) as it decreased to 3.0% from 3.3%, making it the lowest reading since June 2023 (3.0%). It is the third straight monthly decline. The rate peaked at 9.1% in June 2022. Meanwhile, the core inflation rate year-over-year for June was lower than expectations (3.4%) as it decreased to 3.3% from 3.4%, which is more than a three-year low.
Earnings season is underway. According to FactSet, as of July 3, for Q2 2024, the estimated earnings growth rate for the S&P 500 is 8.8%, which would be the highest year-over-year growth since Q1 2022 (9.4%). The estimated revenue growth rate for the index is forecasted to be 4.6%, which would be the 15th consecutive quarter of growth.
Happening this week…
The following companies report earnings this week: PNC, UNH, JNJ, BX, NFLX.
Thanks for reading!
- The Rockline Team