Economic Data, Fed Decision and Earnings Fuel a Volatile Week for Markets 

The last week of July was an event-heavy one for Wall Street. Investors had to evaluate the impact of significant Q2 earnings results, a Federal Reserve rate decision, the latest gross domestic product report and more inflation data. Despite a sharp mid-week plunge following the Fed’s decision to maintain the current interest rate range, equities rebounded, driven by strong corporate updates. Long-term Treasury yields drifted higher during the week amid lingering inflation concerns. Crude oil prices continued to react to Middle East developments, fluctuating between $84.00 and $90.00 per barrel. 

FOMC Keeps Rates Unchanged Despite Calls for Further Tightening 

By a 9–3 vote, the Federal Open Market Committee (FOMC) decided to maintain the target range for the federal funds rate at 3.50%-3.75%. In support of its decision, the FOMC noted that economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little. The Committee also noted that inflation remains elevated relative to the Fed’s 2.0% goal, in part reflecting supply shocks that have driven price increases in certain sectors, including Energy. Three dissenting members voted to raise interest rates by 0.25%. 

Eye on the Week Ahead 

Most of the attention will be focused on the July employment data released at the end of the week. Employment grew by 57,000 in June, while the unemployment rate was 4.2%.