As another frenetic week in the markets comes to a close, investors prepare to step into a new five-day stretch that might get even busier, with a ream of Big Tech earnings, a Fed decision, and rapidly worsening conditions in the Middle East all front and center.

The S&P 500 (^GSPC) closed out Friday 0.1% in the green for a loss of 0.6% on the week. The Dow (^DJI) gained 0.6% on Friday to close the week 0.4% down. The Nasdaq (^IXIC) 0.6% on Friday, losing 2.1% on the week.

Earnings from four of the “Magnificent Seven” Big Tech leaders headline the week: Microsoft (MSFT) and Meta (META) on Wednesday, then Apple (AAPL) and Amazon.com (AMZN) on Thursday.

As was true for earnings last week from Alphabet and Tesla, there’s one big question looming over the Magnificent Seven’s second quarter reports: How much are you spending, and, crucially, what are you getting for it? Can you show real return on investment?

But it’s not all about the Magnificent Seven as investors step into the busiest week of the quarter.

AstraZeneca kicks things off on Monday, followed by reports from SK Hynix (SKHY) (the company’s first since listing in the US), Visa (V), Coca-Cola (KO), and Boeing (BA) on Tuesday. Lam Research (LRCX), General Dynamics (GD), Qualcomm (QCOM), and Starbucks (SBUX) follow on Wednesday, before Mastercard (MA), Shell (SHEL), and Anheuser-Busch (BUD) on Thursday. Rounding out the week on Friday are the US energy giants, ExxonMobil (XOM) and Chevron (CVX), alongside pharmaceutical giant AbbVie (ABBV) and power stalwart Eaton (ETN).

Pulling attention away from the corporate world for a brief few hours on Wednesday will be the Federal Reserve’s June rate decision. Though the committee is widely expected to hold rates steady, with markets betting on a hike to come in the fall, recent escalations in the Middle East have made the meeting look more lively than it did last week.

The final major storyline for investors to follow is the rapidly worsening situation in the Middle East, where attacks in the Red Sea by the Houthis sent oil prices (BZ=F, CL=F) soaring past $100 once more. With no diplomatic solution in sight, inflationary pressures are likely to once again begin capturing significant attention.

Google’s disappointment sets a nervous stage for the rest of Big Tech

If there’s any kind of preview for the Big Tech earnings bonanza awaiting investors this week, it’s the aftermath of Alphabet’s (GOOG, GOOGL) second quarter report just days ago.

Revenue and profit beat expectations. Margins were solid. Google Cloud growth accelerated sharply, by roughly 82% year on year. Search growth was resilient despite competition from the likes of OpenAI’s (OPAI.PVT) ChatGPT and Anthropic’s (ANTH.PVT) Claude.

But management announced sharply higher capex projections for 2026, now estimated to land around $200 billion. Free cash flow fell negative for the first time ever since Alphabet has been a public company. The stock sold off.

It’s not enough now to just say, “We’re spending more,” Apollo Global’s Torsten Sløk wrote. Investors want to see the whole picture. As Sløk put it, “Are capex investments, earnings growth and returns accelerating or stalling?”

(Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.)

Take Microsoft (MSFT), for example. The bear case for the stock, Deutsche Bank analysts led by Brad Zelnick wrote, revolves around three main factors.

Rising component prices, namely memory from the likes of Micron (MU), are forcing spending higher to meet deployment goals. That dynamic is raising persistent doubts about “underlying returns on ballooning investments the company is making across its AI platform.” And, not unique to Microsoft, the company is increasingly exposed to a “concentrated backlog exposure to OpenAI.”

The result, the analysts wrote, is likely to be similar to Alphabet’s numbers. Deutsche Bank is forecasting that management will raise 2026 capex projections to $238 billion from $215 billion previously, with free cash flow forecast to break even.

Scrutiny on these investments is “understandable,” the analysts admitted, as just a few years ago, free cash flow was over $70 billion. But fears may be overblown on each of those fronts for Microsoft — and potentially for the Magnificent Seven as a whole.

“The idea that Microsoft has limited to no recourse to offset these over the coming quarters seems overly pessimistic to us,” the Deutsche Bank analysts said.

People are literally asking for the Fed to hike

The Fed is expected to hold this week following its meeting. Recent data has looked good.

The labor market seems to be doing well, as the monthly jobs reports show steady growth above baseline and this past week’s initial jobless claims numbers fell to their lowest level since 1969, per Capital.com analyst Daniela Hathorn. On the inflation side of the mandate, recent CPI and PPI reports both showed month-on-month declines, though year-on-year increases remain well above target.

But the threat of an energy crisis is reigniting once more after two weeks of constant conflict between the US and Iran, new threats in the Red Sea from the Houthis, and no signs of any momentum toward another diplomatic solution, regardless of what futures pricing implies.

The labor market strength gives the Fed the flexibility to hike interest rates, if it needs to, Hathorn wrote. And, she added, “data suggests markets may have been too optimistic in pricing a rapid shift towards easier monetary policy.”

This is the feeling we get from recent chatter.

Here’s one: In a LinkedIn post that went viral in economics circles, Federal Reserve Bank of Cleveland president Beth Hammack said business leaders have been asking her to do something about inflation. Typically, that would mean restrictive monetary policy, which runs the risk of curtailing economic growth.

“For the first time in my tenure, I’m hearing from businesses who say they think we need to take action to curb inflation, and from consumers who can’t make ends meet about a growing sense of despair,” Hammack wrote. “What I’m hearing from those conversations is that inflation isn’t coming from only one source—it’s broad based.”

As of Friday morning, the market is fully pricing one interest rate hike in September, with a second by March, per Bloomberg data. As the thinking goes on Wall Street, the Fed never delivers single hikes or cuts. If there is a hike this year, it’s likely to signal a deeper shift toward tighter fiscal policy as Chairman Kevin Warsh directs all of the Fed’s effort toward taming inflation.

Everything is going wrong for oil markets

War risk has properly returned, and the second wave of the US-Iran conflict shows no signs of letting up.

For global oil markets, already in a precarious situation, critical logistical nodes just keep getting thwarted. Oil prices have started rebounding in return, reaching levels not seen since the first weeks of June before the signing of the US-Iran memorandum of understanding, as Brent futures (BZ=F) crossed $100 per barrel on Thursday.

“If a ceasefire does not materialize,” Rystad Energy head of geopolitical analysis Jorge León said, “the risk of a significant rebound in oil prices would be substantial.”

The strait is still constricted, and Russia’s refineries are buckling under the weight of bombardment by the Ukrainian military.

Last week, a new threat emerged: another war front on the Red Sea across Saudi Arabia, where the Houthis, an Iran-backed militant group based in Yemen, attacked two Saudi Arabian vessels on Wednesday.

If the Houthis successfully cut off the Bab el-Mandeb Strait, which connects the Red Sea to the Gulf of Aden and has seen roughly 9 million barrels per day of oil flows over the past month, the market could lose up to half of the oil currently exiting the Persian Gulf.

“Any disruption at Bab el-Mandeb would therefore threaten not only Saudi shipments but one of the few remaining routes capable of compensating for the severe reduction in Hormuz traffic,” Rystad’s León said.

This has all created a difficult problem for the market: Even where barrels remain available, fewer routes exist to move them, fewer refineries have room to process them, and fewer emergency buffers remain available to absorb another prolonged outage as new threats emerge.

Economic and earnings calendar

Monday

Economic data: Durable goods orders, June preliminary reading (+1.5% expected, -4.5% previously); Dallas Fed manufacturing activity, July (0.0 previously).

Earnings calendar: AstraZeneca (AZN), Welltower (WELL), Cadence Design Systems (CDNS), Nucor Corporation (NUE).

Tuesday

Economic data: ADP weekly employment change, week ended July 11 (+16,500 previously); Retail inventories, month-on-month, June (+0.6% previously); Wholesale inventories, month-on-month, June preliminary reading (+0.1% previously); FHFA housing price index, month-on-month, May (-0.1% previously); Richmond Fed manufacturing index, July (4 previously); Richmond Fed business conditions, July (-9 previously); Conference Board consumer confidence, July (92 expected, 91.2 previously); Conference Board present situation, July (116.4 previously); Conference Board expectations, July (74.4 previously); Dallas Fed services activity, July (2.9 previously).

Earnings calendar: SK Hynix (SKHY), Visa (V), Coca-Cola (KO), KLA Corporation (KLAC), Seagate Technology Holdings (STX), Boeing (BA), Rio Tinto (RIO), Corning (GLW), Unilever (UL), S&P Global (SPGI), GSK (GSK), UPS (UPS), Waste Management (WM), Barclays (BARC.L), American Tower Corporation (AMT), Sherwin-Williams (SHW), Royal Caribbean Cruises (RCL), Hilton Worldwide Holdings (HLT), NXP Semiconductors (NXPI), Bloom Energy (BE), Teradyne (TER), Ford (F), Electronic Arts (EA), PayPal (PYPL), Centene Corporation (CNC), DTE Energy Company (DTE), CenterPoint Energy (CNP), Expand Energy Corporation (EXE).

Wednesday

Economic data: FOMC rate decision; MBA mortgage applications, week ended July 24 (+1.9% previously).

Earnings calendar: Microsoft (MSFT), Meta Platforms (META), Lam Research (LRCX), Procter & Gamble (PG), Arm Holdings (ARM), Amphenol Corporation (APH), QUALCOMM (QCOM), UBS Group AG (UBS), Starbucks (SBUX), Vertiv Holdings (VRT), Fortinet (FTNT), General Dynamics (GD), Equinix (EQIX), Automatic Data Processing (ADP), Robinhood Markets (HOOD), Eni S.p.A. (ENI.MI), Agnico Eagles Mines (GDX), Deutsche Bank (DB), Boston Scientific Corporation (BSX), Cenovus Energy (CVE), L3Harris Technologies (LHX), Public Storage (PSA), Entergy Corporation (ETR), Old Dominion Freight Line (ODFL), Humana (HUM), Garmin (GRMN), Carvana (CVNA), Chipotle Mexican Grill (CMG), CBRE Group (CBRE), Teva Pharmaceutical Industries (TEVA).

Thursday

Economic data: Personal income, June (+0.3% expected, +0.7% previously); Personal spending, June (+0.4% expected, +0.7% previously); PCE price index, month-on-month, June (-0.1% expected, +0.4% previously); PCE price index, year-on-year, June (+3.6% expected, +4.1% previously); Core PCE price index, month-on-month, June (+0.1% expected, +0.3% previously); Core PCE price index, year-on-year, June (+3.3% expected, +3.4% previously); Initial jobless claims, week ended July 25 (187,000 previously); Continuing claims, week ended July 18 (1.796 million previously); GDP annualized, quarter-on-quarter, second quarter (+2.3% expected, +2.1% previously).

Earnings calendar: Apple (AAPL), Amazon.com (AMZN), Mastercard (MA), Shell (SHEL), Anheuser-Busch InBev (BUD), Mizuho Financial Group (MFG), British American Tobacco (BATS.L), Bristol-Myers Squibb (BMY), Stryker Corporation (SYK), Altria Group (MO), The Southern Company (SO), Valero Energy Corporation (VLO), Lloyds Banking Group (LYG), KKR (KKR), Intercontinental Exchange (ICE), The Cigna Group (CI), American Electric Power Company (AEP), Monolithic Power Systems (MPWR), Regeneron Pharmaceuticals (REGN), Ferrari N.V. (RACE), Yum! Brands (YUM), The Hershey Company (HSY), Strategy (MSTR), Roblox Corporation (RBLX).

Friday

Economic data: MNI Chicago PMI, July (56.7 previously); U. Mich. sentiment, July final reading (54.4 previously); U. Mich. current conditions, July final reading (54.9 previously); U. Mich. expectations, July final reading (54 previously); U. Mich. 1-year inflation, July final reading (+4.2% previously); U. Mich. 5-10 year inflation, July final reading (+3.3% previously).

Earnings calendar: ExxonMobil (XOM), Chevron (CVX), AbbVie (ABBV), Linde (LIN), Eaton Corporation (ETN), Sony Group (SONY), Colgate-Palmolive (CL), Imperial Oil (IMO.TO), Dominion Energy (D), Cameco Corporation (CCJ), Cboe Global Markets (CBOE), Fortis (FTS), Ares Management Corporation (ARES), T. Rowe Price Group (TROW), Moderna (MRNA), AutoNation (AN).

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