Can Oracle, Nike give the market some cheer?

The software and athletic equipment giants report earnings this week. Existing-home sales data since 2007 will be trimmed. Boeing will fuel a strong report on durable goods orders. North Korea's Kim Il Jong's death roils Asian markets.

By Charley Blaine Dec 16, 2011 10:23PM
Charley BlaineUpdated: 1 a.m. ET, Monday

It's the holiday season. Everyone wants some good news about stocks.

You might get some cheer this week, courtesy of Nike (NKE) and Oracle (ORCL). Both report quarterly results after the market close on Tuesday, and Wall Street is hoping for good things from both companies.

Enough to push the stock market out of its doldrums? Possibly in the short run because they will shine lights on a domestic economy that's at least steady.  But the market needs help for the longer term -- from Europe and China in particular.

Next week is the last before two holiday-shortened weeks, the first for Christmas and then for New Years. While Nike and Oracle may offer good results and guidance, overall trading volume will be light over those two weeks, which can create volatile markets.

But the week before Christmas historically has been a good one for investors. Over the last 10 years, Bespoke Investment Group noted Friday, the Standard & Poor's 500 Index ($INX) has finished higher on the week seven times.

Article continues below.
Most investors are likely to think of the past week as a forgettable mess. For good reason: The Dow Jones industrials ($INDU) fell 2.6%, with the S&P 500 dropping 2.8% and the Nasdaq Composite Index ($COMPX) down 3.5%. The losses were the first for the major indexes after two straight weekly gains.

Commodities broke in a big way, with gold (-GC) falling 6.9% and crude oil (-CL) falling 5.9%. Wheat (-ZW) is down 26.5%, and cotton is off 40.7%.

Commodity prices have been falling fairly steadily since spring. Crude oil peaked on April 29 and is up 2.8% for the year. Gold topped out at $1,891.90 an ounce on Aug. 22 and has seen a 33% gain for the year melt down to 12.4%. Silver (-SI) and copper (-HG) are off 4.1% and 25.1%, respectively for the year.

The declines are basically due to softening economies in Europe, thanks to its debt crisis, and in China, where there is increasing evidence that a real estate bubble has burst.

The Shanghai Composite Index, the benchmark Chinese stock market measure, is down 21% this year, with most of the decline coming Aug. 1.  

Asian market weak on Kim Jong Il's death
The open for U.S. stocks on Monday looks weak because of weakness in Asian stocks following the death of North Korean leader Kim Jong Il. In addition, the European worries haven't gone away. (Many readers have noted they're tired on Europe. We don't disagree.)

In the aftermath of Kim Jong Il's death, North Korea faces significant challenges. The annointed leader, Kim Jong Eun, is untested and may face challenges from two older brothers and others.

A famine from 1995 to 1997 killed two million to three million North Koreans, aid agencies estimate, and sowed distrust in the government, The Wall Street Journal noted. North Koreans have learned more about the outside world in recent years, thanks to increasing use of cellphones and availability of DVDs.

The potential for instability in North Korea poses difficulties for the rest of the world because the country in recent years made significant progress in the development of nuclear weapons.

At 1 a.m. ET, South Korea's stock market was down more than 3%. Japan's Nikkei 225 Index was off 78 points to 8,324.

Markets for the week



12/16/2011

12/9/2011

% chg.

YTD chg.
Dow Industrials

11,866.39

12,184.26

-2.61%

2.50%
S&P 500

1,219.66

1,255.19

-2.83%

-3.02%
Nasdaq 

2,555.33

2,646.85

-3.46%

-3.68%
Russell 2000

722.05

745.40

-3.13%

-7.86%
Crude oil 

$93.95

$99.41

-5.49%

2.81%
(per barrel)











U.S. Dollar Index 

80.25

78.68

1.99%

1.21%
10-yr. Treasury

1.85%

2.05%

-9.65%

-43.90%
Gold

$1,597.90

1,716.80

-6.93%

12.42%


The case for Nike and Oracle
So, why should investors see Nike and Oracle offering bullish signals? Consumers are still buying, and many corporations are still investing in information technology to become more efficient.

And, in Nike's case, the swoosh commands a lot of power in stores around the world. The Jordan 11 line of shoes is due out before Christmas, and the company should benefit from the build-ups to the 2012 Olympics in London and soccer's 2014 World Cup in Brazil.

Nike is expected to report 97 cents a share in earnings on revenue of $5.63 billion, up from 94 cents and revenue of $4.84 billion a year ago. So watch Nike's guidance, and watch Nike's order book, a good indicator of future business.

Oracle is expected to earn 57 cents a share on revenue of $9.2 billion, from 51 cents on revenue of $8.6 billion a year ago.

New software licenses are expected to grow 14%, a good sign. Hardware sales are likely to fall. And the company will probably discuss its interest in expanded its interests in cloud-computing.

Who else reports
Here are the other reports to watch for.


 Monday: Red Hat (RHAT). Look for a discussion of cloud-computing as well.

Tuesday: ConAgra (CAG), General Mills (GIS) and payroll processor Paychex (PAYX). If jobless claims are falling and payrolls are growing, Paychex should benefit. The key to ConAgra and General Mills will be their outlooks on commodity costs.

Wednesday: Bed Bath & Beyond (BBBY), used-car dealer Carmax  (KMX), Herman Miller (MLHR) and Steelcase (SCS). Bed Bath & Beyond is the 11th best performer among Nasdaq-100 stocks this year. Bed Bath & Beyond is expected to report 88 cents a share, down from 93 cents ay ear ago. Its view of consumer confidence and its effect on guidance is important. Herman Miller and Steelcase offer a feel for whether there's growth coming in hiring. Both stocks dropped this summer and are only now beginning to recover a little.

Thursday: American Greetings (AM). This is a company whose products are discretionary.

There are no big earnings reports in the week between Christmas and New Year's.

Existing home-sales, economy growth and durable goods orders

The most interesting report of the week will probably be the most depressing: the November  existing-home sales report from the National Association of Realtors, due Wednesday.

The trade group is going to issue revised statistics on sales all the way back to 2007. There are suggestions that the revisions will cut the reported sales by 10% to 15%. But no one is exactly sure, says Nigel Gault, chief U.S. economist for IHS Global Insight.


But the report will tell people is residential real estate has been even worse that we thought.

The reason for the revisions was loud calls for re-examing its data from CoreLogic and others, who said their data indicated a much weaker market than the NAR had thought. The organization redid a lot of its work and found that many sales were double counted. 


The revisions themselves will have little effect on earlier reports of economic growth, IHS Global's Gault said. But it will add to the understanding of why the domestic economy has been so weak. 

Here's what else is due:

Housing starts and building permits for November, due Tuesday. These should some continuing improvement of a very weak part of the economy.

Gross Domestic Product for the third quarter, due Wednesday. Nomura sees a growth moving to an annualized 2.1%.

Jobless claims, due Thursday. Another week of sub-400,000 claims will mean good things for December's jobs report, due on Jan. 6.

Durable goods orders for November, due Friday. Look for a gain of 2.3% at least, due to 96 aircraft orders reported by Boeing (BA), compared with just seven in October. December may be better.

Personal income for November, due Friday. Look for a small decline.

New-home sales, due Friday. This should show a gain, but the numbers are tricky. They count only contracts signed and not cancellations.

Here's what will come in the week of Dec. 26.

Dec. 27: the S&P/Case-Shiller Home Price Index and the Conference Board's December report on Consumer Confidence.

Dec. 29: Jobless claims from the Labor Department.

Dec. 30: The December Chicago Purchasing Managers Index, widely watched by the markets.

8Comments
Dec 16, 2011 11:34PM
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Federal Reserve Bank of New York President William C. Dudley said he cannot imagine the U.S. central bank buying European sovereign debt to combat the crisis, though it has the legal authority to do so. The bar to doing that would be extraordinarily high, Dudley, 58, said today at a hearing of a House Oversight and Government Reform subcommittee in Washington. We have never gone out and bought large portions of sovereign debt in the history of the Fed that I’m aware of.
Smile Wow, Congress passes a two month continuation of the SSA tax cut and pays for it with increased Freddie ans Fannie home loan insurance while the Fed contemplates buying EU debt. Next week is going to be fun.
Dec 18, 2011 1:08AM
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Comrade, ActiveRIA, I would consider tax increase to be used EXCLUSIVELY to pay down the debt, but NOT UNTIL the budget is BALANCED.

 

I know you are a democrat, you believe in SPENDING, BORROWING, TAXING and DEBASING.

Well, after 5 trillion in ADDITIONAL DEFICIT SPENDING the last 3 years, we now have max'ed out even our credit card.

 

You however, seem bent on seizing the wealth, Karl Marx style, to CONTINUE too SPEND.

 

We clearly MUST CUT SPENDING at least 1 Trillion dollars THIS YEAR, not over the next 10 years, just to return to W level deficits...

Dec 17, 2011 4:24PM
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wait till the holders of US debt figure out they are going to be stiffed...

 

This will not end well...  I hope we don't need any oil in the future. 

Dec 18, 2011 12:41PM
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House Republicans and Senate Democrats were in talks on Thursday, with the White House still urging the Keystone provision be stripped from legislation to extend payroll tax cuts to about 160 million Americans.The State Department has warned that it would be forced to reject the pipeline altogether if required to accelerate its new review of Keystone XL.The wrangling between Congress and the White House has distracted attention from TransCanada’s efforts to work with the State Department on finding an alternative route for Keystone XL that would avoid the ecologically fragile Sandhills region of Nebraska. The company agreed last month to find an alternative route and struck a deal with the State Department and Nebraska’s Department of Environmental Quality to conduct a new review of the pipeline

Smile So Boner and the big oil TP'ers are ready to put the SSA tax cuts in the crapper to get their way with the XL pipeline so big oil can get all that crude to Houston a year earlier instead of routing the pipeline correctly. Sure sounds like the Party of No would rather hurt the average workers paycheck rather than do the right thing. Get rid of these guys in 2012 if you know what's good for US.

 

Dec 18, 2011 8:41PM
avatar

PROBLEM SOLVED:  cnn contributor      (what the heII ever happened to cnn??)

 

Conservative’ David Frum: Forget The Deficit, Keep Borrowing And Spending

"There's lots of time to worry about the deficit. The world is happy to lend the United States money for 10 years at less than 2%. I say keep borrowing as much of that money as you can and use the money to address the immediate trauma of an economy in crisis..."

 

Video @ breitbarttv
Dec 18, 2011 9:24PM
avatar

"The most interesting report of the week will probably be the most depressing: the November existing-home sales report from the National Association of Realtors, due Wednesday"

"The trade group is going to issue revised statistics on sales all the way back to 2007. That's likely to cut the reported sales by 10% to 15%. And what that will tell people is residential real estate has been even worse that we thought.

The reason for the revisions was loud calls for reexaming its data from CoreLogic and others, who said their data indicated a much weaker market than the NAR had thought. The organization redid a lot of its work and found that many sales were double counted"

 

If the National Association of Realtors reports any positive news...DO NOT BELIEVE THEM..espeically given their track record of providing misleading information to make things appear to be better than they really are.  They are not to be trusted...

Dec 19, 2011 12:54PM
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Not surprisingly scumbags in absolute control down here since about 1045 hrs and bringing us down quick. This has nothing to do with news or fundamentals; its just market manipulation and they will continue doing it at will because they know that they cant be stopped. All we can do now is wait and see how things develop this afternoon. So sad, cheaters still kings on Wall Street.
Dec 18, 2011 8:45PM
avatar

another problem solved; wouldn't it be HIlarious if JEB got elected and cleaned up both his fathers and brothers messes??

 

Jeb? David Brooks Says Bush III Candidacy Still Possible   video @ breitbart

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