Earnings season will be in full swing in the week ahead.
Results from Bank of America (BAC) and Goldman Sachs (GS) will provide a further look at how the financial system is handling the fallout from a string of bank failures in the spring.
On Wednesday, Netflix (NFLX) and Tesla (TSLA) will be the first of the tech giants fueling this year's market rally to report second quarter results.
On the economic data front retail sales data for June, homebuilder sentiment, and the latest read on housing starts will feature on a quieter economic calendar.
Last week, the US economy checked all the right boxes as data showed inflation increasing at the slowest pace since March 2021 while consumer sentiment hit the highest level in nearly two years.
Those positive reads, coupled with strong earnings from JPMorgan (JPM), Wells Fargo (WFC), and Delta Air Lines (DAL) helped send stocks higher.
The tech-heavy Nasdaq (^IXIC) had its best week since March, rising more than 3.3%. Meanwhile the benchmark S&P 500 (^GSPC) and the Dow Jones Industrial Average (^DJI) each rose about 2.3%.
Financials kicked off earnings season on Friday telling two different stories about the banking system. Large institutions like JPMorgan (JPM) and Wells Fargo (WFC) topped analyst expectations as JPMorgan reported a 67% increase in profits in the second quarter.
But as Yahoo Finance's David Hollerith points out, both of those institutions have large consumer franchises and benefit from things like increased credit card borrowing. Meanwhile Citigroup (C), which relies more heavily on investment banking, saw revenues decline 1% from last year. Citi's stock fell more than 4% on the news.
"The long-awaited rebound in investment banking has yet to materialize," Citigroup CEO Jane Fraser said in a release, "making for a disappointing quarter."
Wall Street dealmaking will be in focus this week as Bank of America (BAC), Morgan Stanley (MS), and Goldman Sachs (GS) will each report results. All are expected to show drops in investment banking and trading from the first quarter.
Investors will be particularly keen to hear from Goldman Sachs CEO David Solomon amid concerns about the health of the Wall Street institution after job cuts and reports of internal pushback about the bank's strategy.
"It's body language from David Solomon, whether he can show that the strategy they have is going to work," CFRA Research research director Ken Leon told Yahoo Finance Live. "They will gain wallet share in the core business. There's no question about that."
On the tech front, Tesla and Netflix will kick off a busy few weeks for the sector at the center of this year's market rally.
With its stock up nearly 130% this year Tesla has seen investors react both to AI-related hype around its self-driving capabilities as well as strong vehicle delivery figures and the rapid expansion of its Supercharger network with industry competitors.
Goldman Sachs analyst Mark Delaney noted in a note on Thursday that the "primary focus will be on its non-GAAP auto gross margin" as investors weigh how recent price cuts are impacting Tesla's profits.
With inflation moderating margins will likely be a focus across sectors as companies grapple with inflation no longer buoying top line growth.
"Margins [are] something that we want to really pay attention to in regards to the pricing power of companies," Crossmark Global Investments chief market strategist Victoria Fernandez told Yahoo Finance Live.
Netflix stock is up a relatively more measured 50% this year, but investors will be keen for commentary from company executives on how any fallout from work stoppages in Hollywood are weighing on the company's plans with the streaming business appearing to be at an inflection point.
Broadly, earnings for S&P 500 companies are expected to decline 7% this quarter, which some analysts believe will mark the bottom of the current earnings recession.
And though a small sample size, companies last week seemed to pass the initial test.
Delta, PepsiCo (PEP), JPMorgan, and Wells Fargo all topped analyst expectations but none saw outsized stock moves following their results.
Ross Mayfield, an investment strategy analyst at Baird, told Yahoo Finance Live this could be the trend for the quarter. Beating Street estimates could be good enough to help stocks maintain gains but not necessarily send stocks higher, he said.
"Unless you're seeing big beats, double line beats, maybe it's not enough to spark the next leg higher for a market that's sitting at bull market highs or the highs for this cycle," Mayfield said. "So I think it'll take a little bit more than just beating these de-risked estimates to spark a new leg higher."
Weekly Calendar
Monday
Economic data: Empire Fed manufacturing, July (-3.4 expected, +6.6 previously)
Earnings: No notable earnings.
Tuesday
Economic data: National Association of Home Builders sentiment index, July (56 expected, 55 previously); Industrial production, month-over-month, June (+0.1% expected, -0.2% prior) Retail sales month-over-month, June (+0.5% expected, 0.3% previously); Retail sales month-over- month, excluding auto and gas, June (+0.4%, 0.4% previously)
Earnings: Bank of America (BAC), BNY Mellon (BK), Charles Schwab (SCHW), Interactive Brokers Group (IBKR, J.B. Hunt (JBHT), Lockheed Martin (LMT), Morgan Stanley (MS), PNC Financial Services (PNC), Pinnacle Financial Partners (PNFP), Western Alliance (WAL)
Wednesday
Economic data: Building permits, June, month-over-month (0.2% expected, +5.6% previously); Housing starts, June, month-over-month (-9.7% expected, +21.7% previously); MBA mortgage applications, July (0.9%, previously)
Earnings: Netflix (NFLX), Tesla (TSLA), Goldman Sachs (GS), Alcoa (AA), Ally Financial (ALLY), ASML (ASML), Citizens Financial Group (CFG), Discover Financial Services (DFS), Halliburton (HAL), IBM (IBM), Las Vegas Sands (LVS), Nasdaq (NDAQ), United Airlines (UAL), Zions Bancorporation (ZION)
Thursday
Economic data: Initial jobless claims, week ending July 15 (244,000 expected; 237,000 previously); Philly Fed Business outlook, July (-10 expected, -13.7 previously); Existing home sales, June, month-over-month (-2.0% expected, +0.2% previously); Leading index of economic indicators, Jun (-0.6% expected, -0.7% previously)
Earnings: Abbott Labs (ABT), American Airlines (AAL), Blackstone (BX), CapitalOne (COF), D.R. Horton (DHI), Freeport McMoran (FCX), Johnson & Johnson (JNJ), KeyBank (KEY), PPG (PPG), TSMC (TSM)
Friday
Economic data: No notable economic releases.
Earnings: American Express (AXP), Comerica (CMA), Huntington Bancshares (HBAN)
Josh is a reporter for Yahoo Finance.
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