Market Update Into July 21st: Earnings Season Begins

Earnings season stumbled out of the gate as Netflix’s double-beat failed to impress, sparking late-week selling pressure and signaling caution ahead. Adding to the week’s volatility, tensions between the White House and Fed Chair Powell escalated amid conflicting signals about Powell’s future, shaking interest-rate markets. Despite these headwinds, the University of Michigan’s Consumer Sentiment Index surprised to the upside, underscoring ongoing economic resilience. Meanwhile, several headlines dominated trader conversations this week, including:

• Thiel Backs Bitmine
• CPI Running Hot
• Trump-Powell Drama
• OpenAI Expands Cloud
• New Polymarket Indicators

Looking ahead, traders face an important week with earnings from market heavyweights Alphabet and Tesla set to drive market sentiment. Fed Chair Powell’s remarks at Tuesday’s banking conference will also be closely watched, potentially providing clarity or further uncertainty as we head into the FOMC meeting at the end of the month. With Q2 earnings, ongoing tariff tensions, and unresolved rate policy questions, traders may see heightened volatility.

Weekly Analysis

SPY (SPDR S&P 500)

The SPY ETF edged higher last week, closing at $627.58 (+0.64%), maintaining its bullish posture. The bullish 8/21 EMA crossover indicator initiated in April remains strong, with price consistently finding support during pullbacks. Alongside the bullish EMA crossover, the decrease in rate cut expectations on the Polymarket Indicator helped fuel the ongoing rally, showing markets shrugged off the need for lower rates.

QQQ (Invesco QQQ Trust)

The QQQ finished in the green last week, closing at $561.26 (+1.27%), as tech earnings season kicked off with Netflix’s report. Interestingly, the index started its bullish run in May even as the Polymarket Prediction Market Indicator flashed declining odds of a Fed rate cut, defying the typical relationship between lower rates and tech strength. This divergence suggests that expectations are already priced in, raising the risk of a “sell-the-news” reaction when rate cuts eventually come around.

IWM (iShares Russell 2000)

Small caps underperformed last week with the IWM ETF closing at $222.33 (+0.29%). With at least one rate cut expected later this year, small caps could have more upside potential than their large-cap peers, provided the ETF continues to hold support above the 8/21 EMA crossover indicator. The key question for traders is whether the market has already priced in the coming policy shift or if there’s still meaningful upside once cuts are delivered.

Earnings

Notable Results

NFLX (Netflix)

• EPS: $7.19 vs $7.06 est
• REV: $11.08B vs $11.04B est

TSM (Taiwan Semiconductor Manufacturing)

• EPS: $2.47 vs $2.37 est
• REV: $30.07B vs $30.04B est

JPM (JP Morgan Chase)

• EPS: $48.11 vs $53.53 est
• SALES: $6.21B vs $6.22B est

BLK (BlackRock)

• EPS: $12.05 vs $10.80 est
• REV: $5.42B vs $5.34B est

WFC (Wells Fargo)

• EPS: $1.60 vs $1.40 est
• REV: $20.82B vs $20.78B est

JNJ (Johnson & Johnson)

• EPS: $2.77 vs $2.68 est
• REV: $23.74B vs $22.85B est

BAC (Bank of America)

• EPS: $0.89 vs $0.87 est
• REV: $26.46B vs $26.70B est

ASML (ASML Holding)

• EPS: $6.69 vs $5.94 est
• REV: $8.721B vs $8.55B est

GS (Goldman Sachs)

• EPS: $10.91 vs $9.48 est
• REV: $14.58B vs $13.36B est

UAL (United Airlines)

• EPS: $3.87 vs $3.77 est
• REV: $15.24B vs $15.35B est

GE (GE Aerospace)

• EPS: $1.66 vs $1.41 est
• REV: $11.02B vs $9.57B est

PEP (PepsiCo)

• EPS: $2.12 vs $2.03 est
• REV: $22.73B vs $22.29B est

What’s Happening Now

GS Goldman Sachs

Goldman Sachs delivered a strong Q2, beating revenue and profit estimates with record equity trading and solid M&A activity driving growth. They also increased the dividend by 33% and repurchased $3B in stock, returning $3.96B to shareholders. Seasonality now tilts in its favor. Next week carries an 80% win rate and one of the year’s highest average returns at 2.15%, setting the stage for any newfound earnings momentum.

NFLX Netflix

Netflix crushed earnings, reporting 16% revenue growth, a 47% jump in EPS, and margins expanding past 30%. Yet shares fell by more than 5% on Friday as high expectations, foreign exchange concerns, and cautious guidance muted the reaction. The timing doesn’t help. Next week is historically its weakest, posting a 13% win rate and an average decline of 3.8% over the past 15 years.

Believe it or not, this is just a fraction of what happened in the markets this week. For a full rundown delivered straight to your inbox every weekend, sign up for The Official Trendspider Newsletter!