The Week Ahead, CPI and Earnings Test the Stock Market Rally Near Record Highs

• Second-quarter earnings growth is tracking near 48% with over 85% of S&P 500 companies reporting, significantly exceeding the 24% estimate at the season's start, while growth remains near 29% excluding investment-related gains at Alphabet and Amazon.
• Core CPI is forecast at 0.2% monthly and 2.5% year-over-year on Wednesday, with overall CPI expected at 0.1% monthly and 3.4% annually, down from prior readings of 0.0%/-0.4% and 2.6%/3.5% respectively.
• CoreWeave revenue is expected to rise 110.7% to $2.56 billion, Cisco revenue forecast at $16.83 billion (up 14.7%), and Applied Materials revenue projected at $9.01 billion (up 23.4%), all driven by AI infrastructure demand.

Market Summary: CPI and Earnings to Test Rally Near Record Highs

Market Performance

U.S. equities posted strong gains last week, with the Dow Jones up 2.96% to 54,036.93, the Nasdaq surging 5.19% to 26,690.62, and the S&P 500 advancing 3.58% to 7,757.64. All major indices remain above their rising 52-week moving averages, confirming an intact long-term uptrend.

Key Economic Focus

The week's critical test comes from Wednesday's CPI report (forecast: core CPI +0.2% m/m, 2.5% y/y) and Thursday's PPI data (forecast: +0.2% m/m). These readings follow July payrolls declining by 23,000 with wage growth at its weakest pace in nearly five years, reducing expectations for additional Federal Reserve tightening.

Additional data includes Thursday's unemployment claims (forecast: 202K) and Friday's retail sales (forecast: +0.1% m/m) and consumer sentiment (forecast: 54.4).

Earnings Spotlight

Second-quarter earnings growth is tracking near 48% with over 85% of S&P 500 companies reporting, significantly exceeding the initial 24% estimate. Key technology earnings this week include:

• CoreWeave (Tuesday): Revenue expected at $2.56B, up 110.7% y/y
• Cisco Systems (Wednesday): Revenue forecast at $16.83B, up 14.7% y/y
• Applied Materials (Thursday): Revenue projected at $9.01B, up 23.4% y/y

Market Implications

The week will determine whether favorable inflation data and sustained AI infrastructure demand can support the rally near resistance levels. Unfavorable inflation readings or weakening guidance from technology leaders could pressure support levels and challenge the current uptrend.