Our Wall Street Week Ahead primer has been engineered to prepare you for the events that could impact your portfolio this week.
The market was set up for it, but it still got the major media outlets all excited. Volatility had eased, and a sense of acceptance had taken over control of stock trading. Recession was now a given, and stocks had already adjusted for the fear factor within it all. So, when more companies reported better than expected results last week than those which reported bad news, the relief rally that ensued should have come as no surprise.
I know what you're thinking... It's easy to say that now Greek. So what's next then... Well, the current market can be compared to your toddler. He'll test you and test you to see what he can get away with before you discipline him. The market will test the economy now, to see what it can get away with before any worse than already expected news reprimands him back into his place. The money on the sidelines, of which there is a lot, is itching to take advantage of bargain pricing (assuming the sale can't get better), so we expect this rally to hold... at least until Talbot's (NYSE: TLB) reports results.
Don’t get me wrong though. I'm not on drugs. I realize not all the news has been good news. The market has endured its share of hard-hitting losses this quarter too. General Electric (NYSE: GE), Citigroup (NYSE: C), Merrill Lynch (NYSE: MER) and AT&T have each shown the wear of recession within their respective earnings releases.
However, each of these aforementioned stocks defiantly posted price gains last week, as cost cutting efforts were taken as positives and decent results elsewhere offered hope. The stock market appears to be breaking out (for now), at least according to major media cheerleaders anyway. There’s no denying last week’s rise though, as the Dow Jones Industrials closed the period up more than 4%.
The Week Ahead
The week ahead is dominated by earnings reports, with some important housing data on tap as well.
Monday's Boston Marathon might perhaps remind us that a rally is a sprint, whereas the next true bull market will take some time before it's sure-footed. President Bush is scheduled to meet with his counterparts from Canada and Mexico in New Orleans on Monday. Also, Fed Governor Randall Kroszner will address a group in Minnesota. We doubt any of these news points will prove market moving on Monday though.
However, the market should find interest in earnings reports from health care giants Merck (NYSE: MRK), Eli Lilly (NYSE: LLY), Quest Diagnostics (NYSE: DGX) and Lincare Holdings (Nasdaq: LNCR). Also, the administration's favorite energy son, Halliburton (NYSE: HAL), is set to report earnings on Monday. HAL spiked 5% on Friday, perhaps in anticipation of its report. Or perhaps HAL rose on the outside chance the stock has some relation to oil, and might benefit from a $117 barrel price tag... In any event, the company has beaten estimates the last three quarters in a row, but the consensus estimate figure has been skimmed over the past 90 days, from $0.68 to the $0.64 figure Thomson Financial now quotes.
Other earnings reports on the schedule include Aladdin Knowledge Systems (Nasdaq: ALDN), Albermarle (NYSE: ALB), Ametek (NYSE: AME), Amylin Pharmaceuticals (Nasdaq: AMLN), Arch Coal (NYSE: ACI), ArthroCare (Nasdaq: ARTC), Bancorp South (NYSE: BXS), Bank of America (NYSE: BAC), Boston Scientific (NYSE: BSX), Brown & Brown (NYSE: BRO), Cadence Financial (Nasdaq: CADE), CEMEX (NYSE: CX), Crane (NYSE: CR), Diedrich Coffee (Nasdaq: DDRX), DST Systems (NYSE: DST), Ethan Allen (NYSE: ETH), Everest Re (NYSE: RE), Gannett (NYSE: GCI), Hasbro (NYSE: HAS), Hercules (NYSE: HPC), Innovex (Nasdaq: INVX), Logitech (Nasdaq: LOGI), Mattel (NYSE: MAT), Nabors Industries (NYSE: NBR), Netflix (Nasdaq: NFLX), Novartis (NYSE: NVS), Novellus (Nasdaq: NVLS), Packaging Corp. (NYSE: PKG), Rohm and Haas (NYSE: ROH), Sensient (NYSE: SXT), Steel Dynamics (Nasdaq: STLD), Texas Instruments (NYSE: TXN), Weatherford Int'l (NYSE: WFT), Yanzhou Coal Mining (NYSE: YZC), Zoran (Nasdaq: ZRAN) and more.
The weekly same-store sales report from the International Council of Shopping Centers continues to get our motor revving on Tuesdays. Last week’s report showed growth stuck at 0.3%, not far from the red zone of contraction. The State Street Investor Confidence Index will likely reinforce the reason why. The index measured 77.4 in March. In other news, the Bank of Canada is scheduled to make a decision on the country's target interest rate, and we expect Canada will follow America's direction, due to economic interrelation.
Existing Home Sales for the month of March is set for report on Tuesday. In February, the annual rate of sales was running at 5.03 million. Economists are anticipating sales ran at a slower pace of 4.95 million in March. Last week, Housing Starts (March) offered sobering news about the state of industry, with starts running at a pace of 947K and permit signings proving even less enthusiastic. In other words, don’t get your hopes up for this week's reports just yet.
The Chairman of the SEC is scheduled to testify before the Senate Banking, Housing and Urban Affairs Committee on the role of credit-rating agencies in creating our current mess. Congress is looking for some heads to roll, and Standard & Poor's seems like a good place to look considering some of the favorable ratings the firm held on what turned out to be not so safe investments.
The critical Pennsylvania Democratic presidential primary should make for some interesting television on Tuesday night as the polls close.
Tuesday’s earning schedule highlights Brinker International (NYSE: EAT), Calamos Asset Management (Nasdaq: CLMS), Encana (NYSE: ECA), Jacobs Engineering (NYSE: JEC), Lockheed Martin (NYSE: LMT), Robert Half (NYSE: RHI), McDonald’s (NYSE: MCD) and Yahoo! (Nasdaq: YHOO).
Also reporting, we note: Aaron Rents (NYSE: RNT), AK Steel (NYSE: AKS), Alliance Financial (Nasdaq: ALNC), Ameriprise Financial (NYSE: AMP), AmSurg (Nasdaq: AMSG), Anadigics (Nasdaq: ANAD), Analysts Int'l (Nasdaq: ANLY), Aries Maritime Transport (Nasdaq: RAMS), AT&T (NYSE: T), Baker Hughes (NYSE: BHI), Broadcom (Nasdaq: BRCM), Carlisle Cos. (NYSE: CSL), CEC Entertainment (NYSE: CEC), Celanese (NYSE: CE), Cerner (Nasdaq: CERN), Chicago Mercantile Exchange (NYSE: CME), Coach (NYSE: COH), Corn Products Int'l (NYSE: CPI), Cree (Nasdaq: CREE), DuPont (NYSE: DD), Fifth Third Bancorp (Nasdaq: FITB), First Cash (Nasdaq: FCFS), Gentex (Nasdaq: GNTX), Harsco (NYSE: HSC), IberiaBank (Nasdaq: IBKC), IDEX (NYSE: IEX), Invitrogen (Nasdaq: IVGN), JetBlue Airways (Nasdaq: JBLU), Kelly Services (Nasdaq: KELYA), Kimberly Clark (NYSE: KMB), Lexmark (NYSE: LXK), National City (NYSE: NCC), Old Dominion Freight (Nasdaq: ODFL), PACCAR (Nasdaq: PCAR), Parker Hannifin (NYSE: PH), Peabody Energy (NYSE: BTU), Pentair (NYSE: PNR), Raymond James (NYSE: RJF), SEI Investments (Nasdaq: SEIC), Sherwin-Williams (NYSE: SHW), Smith Int'l (NYSE: SII), Smurfit-Stone Container (Nasdaq: SSCC), Sovereign Bancorp (NYSE: SOV), Telefonos De Mexico (NYSE: TMX), Tellabs (Nasdaq: TLAB), Teradyne (NYSE: TER), Tupperware (NYSE: TUP), UAL (Nasdaq: UAUA), UnitedHealth Group (NYSE: UNH), USG (NYSE: USG), VF Corp. (NYSE: VFC), VMware (NYSE: VMW), Waters Corp. (NYSE: WAT), Wyeth (NYSE: WYE), Yum! Brands (NYSE: YUM) and more believe it or not!
Wednesday offers the weekly Petroleum Status Report. Perhaps more notable than the move in stocks last week, oil prices rocketed higher nearly five dollars, to approximately $117 a barrel in after hours trading on Friday. More importantly to you perhaps, the price of gasoline has started to catch up. Refining margins have gotten so tight, that some refiners have cut back on capacity usage. This logical consequence has resulted in a tightening of gasoline supply, and is now serving to drive gas prices higher. With the national average price at approximately $3.45 a gallon already, most analysts see the price moving yet higher.
The Mortgage Bankers Association reports its regular reading on mortgage activity, but the market and industry interests will pay much closer attention to the home sales reports out this week.
The earnings schedule includes Amazon.com (Nasdaq: AMZN), Apple Computer (Nasdaq: AAPL), Genzyme (Nasdaq: GENZ), GlaxoSmithKline (NYSE: GSK), Philip Morris Int’l (NYSE: PM), Boeing (NYSE: BA) and VCA Antech (Nasdaq: WOOF).
Also look for reports from Aflac (NYSE: AFL), Alcon (NYSE: ACL), Allegheny Technologies (NYSE: ATI), Ambac (NYSE: ABK), AmeriSourceBergen (NYSE: ABC), Anheuser-Busch (NYSE: BUD), Becton, Dickinson & Co. (NYSE: BDX), Biogen Idecc (Nasdaq: BIIB), Cadence Design (Nasdaq: CDNS), Candela (Nasdaq: CLZR), Chipotle Mexican Grill (NYSE: CMG), Citrix Systems (Nasdaq: CTXS), Delta Airlines (NYSE: DAL), DPL Inc. (NYSE: DPL), Electronics for Imaging (Nasdaq: EFII), EMC Corp. (NYSE: EMC), FMC Corp. (NYSE: FMC), Freeport-McMoRan (NYSE: FCX), General Dynamics (NYSE: GD), Genzyme (Nasdaq: GENZ), GSI Commerce (Nasdaq: GSIC), JAKKS Pacific (Nasdaq: JAKK), Lam Research (Nasdaq: LRCX), Level 3 Communications (Nasdaq: LVLT), Mattson Technology (Nasdaq: MTSN), Moody's (NYSE: MCO), Noble Corp. (NYSE: NE), Northwest Airlines (NYSE: NWA), NutriSystem (Nasdaq: NTRI), P.F. Chang's (Nasdaq: PFCB), Pactiv (NYSE: PTV), Praxair (NYSE: PX), Pulte Homes (NYSE: PHM), Qualcomm (Nasdaq: QCOM), Regis (NYSE: RGS), Rockwell Automation (NYSE: ROK), Ryland Group (NYSE: RYL), Sanmina-SCI (Nasdaq: SANM), The Allstate Corp. (NYSE: ALL), Tractor Supply (Nasdaq: TSCO), WellPoint (NYSE: WLP) and more.
Thursday brings with it the New Home Sales Report for March. Over the prior two months, sales of new homes have run at an annual pace around 590K. Spring is the hot season for home sales, but homebuilders are spent (not to mention buyers) and may not have the ability, or will, to market incentives as well as they might like this year. Plus, buyers are shy now, with prices moving in the wrong direction.
Weekly Initial Jobless Claims are seen measuring 375K for this past week, compared to 372K the week before. We remind you that last week's reported figure represented a drop from the prior week's move above 400K. March Durable Goods Orders are seen increasing 0.6%, after posting a 1.7% decline in February. While it would be nice to see a bounce, and one is possible off of the perhaps caution-driven decline last time out, we again would not get our hopes up.
Individual corporate reports, including one from Canadian natural gas giant Encana (NYSE: ECA), should drown out the noise from the EIA's weekly inventory report this time around. Sovereign wealth funds will be the topic of concern, when Fed Board General Counsel Scott Alvarez addresses the Senate Banking, Housing and Urban Affairs Committee on Thursday.
Thursday’s earnings schedule highlights news from Aetna (NYSE: AET), American Express (NYSE: AXP), PepsiCo (NYSE: PEP), Potash Corp. (NYSE: POT) and Rockwell Collins (NYSE: COL).
Others reporting include 1-800-Flowers.com (Nasdaq: FLWS), 3M (NYSE: MMM), Affymetrix (Nasdaq: AFFX), Altria (NYSE: MO), Amgen (Nasdaq: AMGN), AstraZeneca (NYSE: AZN), AutoNation (NYSE: AN), Baidu (Nasdaq: BIDU), BJ's Restaurants (Nasdaq: BJRI), Black & Decker (BDK), Brunswick (NYSE: BC), Cash America (NYSE: CSH), Chubb (NYSE: CB), Coherent (Nasdaq: COHR), Cohu (Nasdaq: COHU), ConocoPhillips (NYSE: COP), Credit Suisse (NYSE: CS), Deckers Outdoor (Nasdaq: DECK), Diamond Offshore Drilling (NYSE: DO), EarthLink (Nasdaq: ELNK), Eastman Chemical (NYSE: EMN), Electronic Data Systems (NYSE: EDS), Exelon (NYSE: EXC), Fortune Brands (NYSE: FO), Goodrich (NYSE: GR), ImClone Systems (Nasdaq: IMCL), Janus Capital (NYSE: JNS), Juniper (Nasdaq: JNPR), Kennametal (NYSE: KMT), KLA-Tencor (Nasdaq: KLAC), Kulicke & Soffa (Nasdaq: KLIC), L-3 Communications (NYSE: LLL), Lab Corp. (NYSE: LH), Mathews Int'l (Nasdaq: MATW), Microsoft (Nasdaq: MSFT), Motorola (NYSE: MOT), Northrop Grumman (NYSE: NOC), Occidental Petroleum (NYSE: OXY), Pool Corp. (Nasdaq: POOL), Raytheon (NYSE: RTN), T. Rowe Price (Nasdaq: TROW), The Cheesecake Factory (Nasdaq: CAKE), Dow Chemical (NYSE: DOW), US Airways (NYSE: LCC), Whirlpool (NYSE: WHR) and more.
Friday closes out the week with the University of Michigan’s Consumer Sentiment Survey for April. There’s not much reason to be hopeful for improvement in this report after March sentiment dipped to 69.5, down from 70.8 in February. The earlier readings for April were already much worse, so consensus views for 63.2 here are not a surprise.
Friday’s earnings include Coventry Health (NYSE: CVH), Honda Motor (NYSE: HMC), Wendy’s Int’l (NYSE: WEN), Bright Horizons (Nasdaq: BFAM), Ceradyne (Nasdaq: CRDN), Entergy (NYSE: ETR), Goodyear Tire & Rubber (NYSE: GT), Idexx Laboratories (Nasdaq: IDXX), Kyocera (NYSE: KYO), Nomura Holdings (Nasdaq: NRSCF.PK), QLT, Inc. (Nasdaq: QLTI), Standard Register (NYSE: SR), Ericsson (Nasdaq: ERIC), Viad Corp. (NYSE: VVI) and others.
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