What happened last week…
The Federal Open Market Committee (FOMC) left interest rates unchanged at 4.25% to 4.50% in a 9-2 vote. It was the first time since 1993 more than one Fed governor dissented as both Governor Christopher Waller and Fed Vice Chair for Supervision Michelle Bowman voted for a quarter-point rate cut.
Federal Reserve Chairman Jerome Powell said, “Today we decided to leave our policy rate where it’s been, which I would characterize as modestly restrictive. It seems to me, and to almost the whole committee, that the economy is not performing as though restrictive policy is holding it back inappropriately and modestly restrictive policy seems appropriate.” According to the CME FedWatch Tool, as of August 1, there is an 85.5% probability of a 25-basis point reduction at the next meeting on September 16-17.
The GDP growth rate (first estimate) for Q2 2025 beat expectations (2.3%) as it reached 3.0%, up from the Q1 2025 reading.
The ADP employment change beat expectations (64,000) as it increased to 104,000. The unemployment rate matched expectations as it remained at 4.2%. Nonfarm payrolls increased to 73,000. Average hourly earnings month-over-month matched expectations as it increased to 0.3% from 0.2%.
The manufacturing PMI for July was 48.0.
According to FactSet, as of August 1, for Q2 2025, 66% of S&P 500 companies reported earnings with 82% having a positive EPS surprise and 79% having a positive revenue surprise. The blended earnings growth for the S&P 500 is 10.3%, which would be the third straight quarter of double-digit growth. The blended revenue growth for the index is 6.0%, which would be the highest growth rate since Q3 2022 (11.0%).
Happening this week…
Earnings season continues in full swing this week. On Tuesday, the non-manufacturing PMI for July is expected to increase to 51.5 from 50.8.
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- The Rockline Team
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