Q2 overview: Slowing sales growth, 75 bps increase, and the GDP report

M1 Team
M1 Team August 1, 2022
Man and woman looking at quarterly market performance on a computer screen

Last week was packed full of finance decisions, earnings, and predictions. Today, we’re breaking down everything that happened to help you sort through the media stack.

We’re also sharing:

  • How interest rates are determined
  • What smart investors do in bear markets, according to the WSJ
  • A visual of interest rate hikes around the world


Show me the money

Calendar of July 2022

The top four companies (by market capitalization) in the U.S. reported earnings and shared forecasts for the rest of the year. The Federal Reserve raised rates by 75 bps. On top of it all, the GDP report signaled the red flag of recession.

Big Tech’s Q2 earnings

  • Google (GOOGL) reported the slowest quarterly sales growth in two years, citing the markets negative effect on digital ad sales.
  • Microsoft (MSFT) also experienced its slowest earnings growth in two years thanks to a slowdown in its cloud business and video game sales.
  • Apple (AAPL) beat Wall Street’s expectations and remained resilient despite macroeconomic challenges. They reported an 11% decline in profits, but iPhone sales continued to grow.
  • Amazon (AMZN) had slowing sales growth for the second straight quarter. Their cloud computing business remains strong, but retail operations are still suffering.

For the most part, investors expected this. Despite slowing sales growth, these companies are showing investors they’re well-positioned to weather a recession.

Interest rates rise once again

The Federal Reserve raised rates by 0.75 basis points, lifting their benchmark Federal Funds Rate between 2.25% to 2.5%. This marks the fourth rate hike of 2022, as the central bank attempts to reverse easy monetary policies and combat 41-year high inflation.

Gross Domestic Product drops

The second quarter Gross Domestic Product (GDP) report came out last Thursday, stating the U.S. economy experienced a falling GDP rate for a second quarter.

Quarter two fell at an inflation and seasonally adjusted rate of 0.9% following the first quarter’s drop of 1.6%.

Gross domestic product is the measure of goods and services produced across the entire country’s economy. Two consecutive quarters of a falling GDP is the commonly used definition of a recession. But many other factors determine the severity of a recession, such as unemployment, consumer sales, and household income.


How interest rate changes affect you

Who sets interest rates? Understanding the Federal Funds Rate featured image

Learn the implications of interest rate hikes — both for the economy and your personal finances.

The mindset to manage a down market

How M1 thinks about market volatility and market corrections featured image

Take a break from earnings reports to consider your strategy during down markets.


This week, take a moment to focus on:

  • An article: Since you can’t predict the unpredictable, you should control the controllable. Read what WSJ columnist, Jason Zweig has to say about smart investors in down markets.
  • A mindset: How to cope with economic anxiety according to a psychotherapist and financial psychologist.

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