Here are the 3 biggest things we’re watching in the stock market this week
We’re entering the quiet before the revenue storm. The trading week shortened by Independence Day is behind us. So is the June jobs report , and the long-awaited Honeywell Aerospace spin-off. Of course, something can always happen that surprises us and throws Wall Street for a loop. Don’t even argue we can count on that. But in terms of the actual calendar, the first full week of July is light on both earnings and market-moving economic reports. The calm will not last. The trading week of July 13 to July 17 marks the official start of the second quarter earnings season as the country’s major banks report; it will also release June inflation data, where we will look for signs of oil-driven inflation. OK. Before we get too far ahead, here’s a closer look at a few key events lined up for this week – and a key market theme to watch. 1. Wages: Although there are no group names to report, a few household names with their own concepts in the US economy are on the docket. The three biggest reports are Levi Strauss on Wednesday evening, PepsiCo on Thursday morning, and Delta Air Lines before the bell on Friday. Levi’s is about the consumer. How are consumers allocating their discretionary dollars given the recent inflation and inflation caused by high oil prices? Although the price of crude oil has fallen, the prices consumers pay at the pump have fallen much less. US WTI crude is down 27% from last month, while the national average for a gallon of natural gas is down 10.5%, according to AAA data from Thursday. In addition, the shock of higher prices is still fresh in people’s minds and may color consumers’ purchasing decisions, despite signs that prices should come down significantly. Some of the questions specific to the company: Did its clever marketing around the World Cup – in particular, FIFA forcing the company to hide its logo in Levi’s Stadium in California – lead to a tangible profit? We’ll also tune in for comments on its efforts to win over more female consumers, something CEO Michelle Gass discussed with Jim Cramer on “Mad Money” a while ago. Pepsi, meanwhile, can provide insight into inflationary pressures in the food industry. Commenting on the use of demand during the growth of the discovery of GLP-1 will be noteworthy if we look at our participation in Eli Lilly, the leading manufacturer of obesity drugs. Pepsi and other food brands rely on protein-enriched products, due in part to increased GLP-1s. Although central banks and economists often look at so-called core inflation gauges, which exclude food due to price volatility, consumers cannot stop buying food. As a result, food inflation squeezes the amount of money people have left over to buy things like Levi’s jeans and plane tickets, which brings us to our next benefits analysis. Delta Air Lines is probably the most interesting and informative of the three major reports. Because flying represents such a large discretionary expense, it can be more revealing about consumers’ spending desires than, say, Levi’s. The company can also shed light on how falling crude prices are replacing cheaper prices for finished goods – in this case, jet fuel. It is worth noting that Delta is different from its US peers because it owns an oil refinery, which gives them a margin on fuel costs. Jet fuel and diesel belong to the same group of refined petroleum products, known as middle distillates. As a result, the power of jet fuel can give clues to diesel (of course the biggest costs of the names of the Club FedEx Freight and FedEx Corp ). The readthrough is a little more specific to automotive fuel, however, given that the fuel comes from the light fraction of the distillate, where the crude is heated, vaporized and separated. 2. Economic data: After Thursday’s weaker-than-expected jobs report, we’ll get two updates this week on employment in the services sector — a broad and important set of industries that includes health care, housing, food and finance. On Monday, S&P Global releases its purchasing managers’ index for service providers at 9:45 a.m. ET. Then, 15 minutes later, the Institute for Supply Management will release its PMI for the services industry. Although these reports differ in some ways, their goals are the same: provide timely information on business activity across the country, based on survey responses from local companies. Think of this as a monthly checkup. Something we like about the ISM report, in particular, is that it includes an anonymous “what respondents said” section, which provides great insight into the quantitative aspects of the survey. While we do not make buying or selling decisions based on a single PMI reading, they do draw on our understanding of the economy as well as official government data and corporate results and commentary. On Thursday, the National Association of Realtors’ released its existing home sales for June, where we will look for any signs of improvement in the sluggish US housing market. Our position at Home Depot is a bet that, eventually, mortgage rates will drop to levels that have created years of low demand for housing, boosting its sales and profits. 3. AI Trading: The last two trading days of last week brought brutal selling across the semiconductor industry and other beneficiaries of artificial intelligence. As a result, the iShares Semiconductor ETF ( SOXX ) and the VanEck Semiconductor ETF ( SMH ) are now trading within a few percent of their 50-day moving averages. That is an important technical level watched and used by traders, which indicates a stock or trend indicator. Within technical analysis, it can also act as a support level or a resistance level. For that reason, we will be looking to see if buyers step in to support the semiconductor trade that has driven Wall Street’s first solid run through 2026. Or, perhaps, less hawkish Federal Reserve prospects, thanks to a tepid June jobs report, are keeping the extended trade alive at the expense of first-half winners. That turnaround was reflected in our portfolio on Wednesday and Thursday, with AI winner Corning trading hard and unpopular Johnson & Johnson finishing the week at a record close. While it’s rarely fun to see your stock fall, Corning’s situation is a reminder of why we like to cut stocks after a move. We did just that on Tuesday, before the stock dropped 23% in two days. The latest power at J&J is a reminder of why we don’t stop diversifying. Week ahead Monday, July 6 S&P Global PMI services at 9:45 am .ET ISM PMI services at 10 am ET Tuesday, July 7 Before the bell: No reports of note After the bell: Penguin Solutions (PENG) Wednesday, July 8 Census Bureau wholesale report for May at 10 am ET Federal Reserve meeting Troy pm ET 2 pm Helen’s policy meeting of June (HELE) After the bell: Levi Strauss (LEVI), AZZ (AZZ) Thursday, June 9 Initial jobless claims at 8:30 am ET Existing home sales at 10 am ET Before the bell: PepsiCo (PEP), Simply Good Foods (SMPL) After the bell: WD-40 (WDFC0) Before Flights Friday No reports of note (Jim Cramer’s Charitable Trust is long FDXF, FDX, HD, HONA, JNJ, GLW and CAH. See here for a full list of stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling stock in his charity portfolio. 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