Mild Macro Data Sets up AI Tech Earnings and a Busy August Corporate Event Stretch

Cooling inflation and resilient consumer spending have eased economic concerns, shifting Wall Street’s focus squarely to earnings Big Tech results, beginning today (July 22) after the bell, offer fresh insight into AI spending trends and corporate profitability Rising oil prices and Middle East tensions remain key risks that could challenge the disinflation narrative It’s difficult to call any stretch a calm, quiet summer week, but this one would seemingly fit the bill. Earnings from Alphabet (GOOGL), Tesla (TSLA), and IBM (IBM) are the standouts, along with a slew of cyclicals reporting Q2 results .​ Beyond that, the Fed is in its blackout window ahead of the FOMC’s July 29 interest rate decision, and we won’t get major economic data until the end of the month.​

Last week offered a treasure trove of consumer clues , though. First, the June CPI report (released on Tuesday morning, July 14) came in much better than expected. According to Econoday, the 0.4% drop in the headline figure was the largest monthly decline since April 2020. The energy component fell 5.7%, while gasoline prices plunged 9.7%. On a year-over-year basis, CPI inflation cooled to 3.5%, while the core rate ticked down by two basis points, rounding to 2.6%.

It was the first in what turned out to be a somewhat Goldilocks set of June reports. The CPI on its own flipped the Fed rate hike odds to the likelihood of a hold. The following morning, PPI data confirmed a sanguine inflation trend. Wholesale prices dipped 0.3%, aided by a 6.4% energy price retreat, helping to push goods costs lower as the first half drew to a close. Services inflation was still apparent, however, and year-over-year PPI remained elevated at 5.5%.

Then came Retail Sales from the U.S. Census Bureau on Thursday, July 16. This macro reading was not far from consensus, with headline spending edging up 0.2% in June, along with a stronger revised 1.0% increase in May. On a one-year basis, retail outlays were up 6.7%, well above the prevailing inflation rate, suggesting that consumers kept shopping online, spending on travel, and gearing up around the New York Knicks’ NBA Finals victory and the 2026 FIFA World Cup.

What does it all mean for investors? Well, the economy keeps chugging along, in part because of the AI buildout. But a “spend at all costs” mindset has shifted to expense control on the part of major corporations, with Uber (UBER) among the notable firms to tap the brakes on model usage. Indeed, so-called “token-maxing” has given way to a more throttled mindset, just as the Q2 earnings season kicks into high gear. We’ll know more when the major AI hyperscalers and other mega-cap tech companies report quarterly results later this month.​

In the rearview, IBM’s preliminary earnings report last week stunned the Street, sending shares spiraling lower for their worst day since Big Blue’s modern-era IPO in 1962. It wasn’t exactly the kind of start to the reporting period that investors hoped for. As normally scheduled revenue and profit numbers hit the tape, FactSet notes that companies missing on actual earnings have seen their stock prices get clobbered. John Butters confirmed that firms with negative surprises have seen an average stock price decline of 9% (covering the period from two days before the release through two days after). It’s a historically large percentage, while beats are barely being rewarded.​

As for the key dates, following GOOGL and TSLA this week, SK Hynix, Samsung, Meta , Microsoft , Apple , and Amazon put out quarterly earnings next week. Also be on the lookou...