Markets enter a critical week following Friday's dramatic selloff that delivered the worst one-day loss in months for major indexes, despite the Nasdaq and S&P 500 ($SPX) (SPY) hitting record highs Thursday. The market rally's sudden reversal came amid a disappointing July jobs report that revived Fed rate cut hopes while simultaneously raising concerns about economic momentum, compounded by rising core inflation readings. President Trump's implementation of new tariff rates for dozens of countries effective August 7 adds another layer of uncertainty, while his controversial firing of the Bureau of Labor Statistics head following the jobs report has raised questions about the integrity of future economic data. This week's economic calendar centers on Tuesday's ISM Services index, which economists expect to rise to 52.2 from 50.8, potentially signaling accelerating expansion in the economy's largest sector. Key earnings from Advanced Micro Devices (AMD), Disney (DIS), and other major companies will test whether corporate fundamentals can support recent market highs amid growing macro uncertainties.
Here are 5 things to watch this week in the Market.
Services Sector Economic Pulse
Tuesday's ISM Non-Manufacturing PMI at 10am takes center stage as the week's most important economic release, with economists forecasting a rise to 52.2 from June's 50.8 reading. This report will provide insights into the services sector, which comprises the largest portion of the U.S. economy, particularly important after Friday's weak jobs data raised questions about economic momentum. The services PMI's employment component will be closely watched for confirmation or contradiction of the disappointing payrolls report, while the prices paid index could offer additional inflation signals. Tuesday's earlier Services PMI reading at 9:45am will provide a preliminary gauge before the comprehensive ISM report. Given recent concerns about economic growth and the Fed's policy outlook, any significant deviation from expectations could trigger substantial market volatility. A strong reading might alleviate recession fears while potentially tempering rate cut expectations, whereas weakness could reinforce concerns about economic deceleration.
Technology Earnings Under Pressure
The semiconductor sector faces scrutiny with Advanced Micro Devices (AMD) reporting Tuesday amid ongoing questions about AI chip demand sustainability and data center spending patterns. AMD's results will be particularly important given recent volatility in chip stocks and investor concerns about inventory levels and demand visibility. The report comes as markets assess whether the AI infrastructure buildout can justify current valuations in the semiconductor space. Other notable technology earnings include Arista Networks (ANET) Tuesday, providing insights into networking equipment demand, and Airbnb (ABNB) Wednesday, offering perspective on travel and leisure spending trends. Palantir (PLTR) Monday will provide insights into enterprise software and government contract trends. Given the recent market selloff and concerns about stretched valuations in technology, these earnings results could significantly influence sector sentiment and broader market direction.
Consumer and Industrial Bellwethers
Wednesday delivers a trio of major consumer-facing earnings with Disney (DIS), McDonald's (MCD), and Uber (UBER) reporting results that will provide comprehensive insights into consumer spending patterns. Disney's results will offer perspective on streaming growth, theme park attendance, and content spending amid intensifying competition in entertainment. McDonald's will provide insights into quick-service restaurant trends and consumer price sensitivity, particularly important given ongoing inflation concerns. Uber's earnings will shed light on ride-sharing demand and food delivery trends, offering another angle on consumer behavior. Tuesday's Caterpillar (CAT) earnings will provide crucial insights into global industrial activity and infrastructure spending, while Pfizer (PFE) will offer perspective on pharmaceutical trends and healthcare spending.
Tariff Implementation and Market Impact
President Trump's implementation of new tariff rates for dozens of countries effective Wednesday, August 7, creates a significant market catalyst that could influence trading patterns throughout the week. The timing coincides with key earnings releases and economic data, potentially amplifying market reactions as investors assess the combined impact of trade policy changes and corporate fundamentals. Companies with significant international exposure, complex supply chains, or import dependencies could face renewed scrutiny during earnings calls as management teams address potential cost impacts and mitigation strategies. The tariff implementation follows Friday's market selloff, creating additional headwinds for risk assets and potentially influencing Fed policy considerations if trade restrictions contribute to inflation pressures. Sectors particularly vulnerable include retail, technology hardware, automotive, and industrial companies with global operations.
Bond Market and Data Reliability Concerns
Wednesday and Thursday's Treasury auctions—10-year notes Wednesday at 1pm and 30-year bonds Thursday at 1pm—will test investor appetite for government debt amid ongoing concerns about fiscal policy and inflation trends. The auctions come as markets grapple with mixed signals from recent economic data and uncertainty about Fed policy direction following Friday's disappointing jobs report. Thursday's initial jobless claims at 8:30am will provide another employment data point, though President Trump's firing of the Bureau of Labor Statistics head raises questions about data integrity and potential political interference in economic reporting. This controversy could influence how markets interpret future economic releases and complicate Fed policy decision-making. The bond auctions will be closely watched for signs of foreign demand and domestic investor appetite, particularly given ongoing concerns about government spending and debt levels.
Best of luck this week and don't forget to check out my daily options article.
On the date of publication, Gavin McMaster had a position in: SPY . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
