What to expect in the week ahead (PEP, JPM, GS, TSM)

The S&P 500, the NASDAQ, and the Dow all posted weekly gains of less than 0.5%, adding slightly to their record highs set in the previous week. Within the major indexes, growth stocks extended their recent run of outperformance versus their value counterparts.

A recent trend of rising U.S. government bond prices accelerated, sending the yield of the 10-year U.S. Treasury bond below 1.30% in intraday trading on Thursday—the lowest in nearly five months. As recently as late March, the yield was 1.74%.

Second-quarter earnings reporting season gets underway in the week ahead and eye-popping results could validate a market that continues to easily shake off any concerns on its steady march to record high after record high.

The second quarter's profits for S&P 500 companies are expected to be up 65% from the same quarter a year ago in the depths of the pandemic, according to Refinitiv. The growth will be led by a near 570% increase in profits for industrials, one of the hardest hit sectors during the pandemic.

Among other sectors, consumer discretionary companies are also expected to see a big profit comeback, with earnings up 271%, according to Refinitiv. Energy companies are expected to see earnings bounce back by 225%, and materials are expected to see earnings growth of 115%. Tech lags those sectors with just a 31.6% gain. Utilities are expected to see earnings decline by 0.9%.

The week's economic calendar will be equally busy. The Bureau of Labor Statistics releases the consumer price index for June on Tuesday, followed by the producer price index for June on Wednesday. Expectations are for year-over-year increases of 4.0% and 6.4%, respectively, in the core CPI and core PPI.

Investors and economists will also get a look at a pair of sentiment surveys this week: The National Federation of Independent Business' Small Business Optimism Index for June on Tuesday and The University of Michigan's Consumer Sentiment index for July on Friday. The Federal Reserve releases its latest beige book on Wednesday, the Census Bureau reports retail-sales data for June on Friday, and the Bank of Japan announces its latest monetary-policy decision on Friday.