Wal-Mart, Macy's key a big week ahead for stocks

Earnings from the big retailers and Dell, Hewlett-Packard and Target will signal if the big rally since October can continue. European financial ministers and Greece agree on terms of a rescue package. Rising oil prices are a threat.

By Charley Blaine Feb 20, 2012 7:04PM
Charley BlaineUpdated: 12:45 a.m. ET, Tuesday

When U.S. financial markets reopen Tuesday after the President's Day weekend, the stars have apparently lined up for stocks to move higher.

European finance ministers and Greece's government agreed on terms for a $171.9 billion bailout package for the troubled nation. There is, however, deep skepticism that the austerity package that Greece is being forced to accept will work. (There's also skepticism the program will really be enacted.)

There's hope that the U.S. economy will continue to strengthen. The signals that investors will be looking for will come from earnings reports more than economic reports. Reports due this week include results from Wal-Mart Stores (WMT), Macy's (M), Hewlett-Packard (HPQ), Dell (DELL), Target (TGT) and Newmont Mining (NEM).

It's not clear how investors are looking at rising oil and gasoline prices because of the tensions over Iran's nuclear program. The cynic would say investors are delusional that high oil prices won't hurt. Crude oil (-CL) finished Friday at $103.60 a barrel and moved  above $105 in electronic trading on Monday. AAA said the national price for regular unleaded gasoline was $3.565 a gallon, up 8.8% this year and up 12.5% from a year ago.

The Dow Jones industrials ($INDU) finished last week at 12,950, the best close for the blue chips since May 19, 2008. The Standard & Poor's 500 Index ($INX) closed at 1,361, the best finish for the index since April 2011.  The Nasdaq Composite Index's ($COMPX) finish at 2,951.78 was its best close since December 2000.
The Greek situation was up in the air until nearly dawn on Tuesday. Dutch officials wanted more direct outside control of Greek government spending. And there were debates on how much private investors will be required to write off on the value of the Greek bonds they own.

The deal apparently calls for Greece to reduce its debt to 120.5% of its gross domestic product by 2020; it is 160% now. Greece agreed that debt payments will get first priority in government spending plans.

In addition, there will be a new round of spending and pension cuts and a 22% cut in the minimum wage.

Private bond holders agreed to a 53% cut in the value of their holdings.

What is not clear is how Greece expects to get its economy to grow again. The economy is in its fifth year of recession, and many Greeks have left the country. Bank deposits have shrunk substantially.

Can the  big rally continue?
U.S. stocks have enjoyed a huge recovery from the chaos that broke out last year after the Japanese earthquake and tsunami, the never-ending European debt crisis, the Arab spring and political battles in the United States.

The major indexes are up about 25% from their intraday lows in October. Apple (AAPL) is up 41.7%. Microsoft (MSFT) has added 28.8%. (Microsoft is the publisher of MSN Money.)

The Dow has been flirting with 13,000, a level not seen since the spring of 2008. The S&P 500 is trying to move past 1,370, last reached in April 2011.

The gains since October have been so strong that a pullback has become basically inevitable. What's not known is what will cause it.

The best bet is higher oil and gas prices dampening consumer spending. That would mean one would start to see the effect with auto sales and then home sales.

There are indications home sales are bottoming. Inventories of homes for sale around Sarasota, Fla., are below a six months' supply -- a signal of a tightening market.

So if gasoline and oil prices are to dampen economic expectations, look for spring. That could suggest a rocky summer for markets.

Here's how the the week shapes up:

Earnings will dominate the U.S. chatter
This is the time of the earnings cycle where companies most exposed to direct consumer spending report results.

Tuesday is the big day day, with reports due from Dell, Home Depot, Hecla Mining (HL), La-Z-Boy (LZB),  Macy's and Wal-Mart. Listen closely to how the companies describe current demand and their expectations for the next few months.

Wednesday: Boston Beer (SAM), Hewlett-Packard, Chico's FAS (CHS), TJX Companies (TJX), the parent of T.J. Maxx.

Thursday: American International Group (AIG), Crocs (CROX), Gap (GPS), Kohl's (KSS) and Target (TGT) and doughnut retailer Tim Horton's (THI).

FridayJ.C. Penney (JCP), Newmont Mining (NEM) and Tree.com (TREE), parent of online lender Lending Tree.

Housing will dominate the economic reports
The National Association of Realtors will estimate existing-home sales for January on Wednesday. Nomura Securities is projecting an annualized sales rate of 4.765 million units, which would be the best sales rate since 2009.

On Friday, the Commerce Department will report on new-home sales. The expectation is for sales to approach 400,000 units. Single-family starts may hit 312,000 on an annualized basis, a bit of an improvement. 

Also due are weekly reports of chain-store sales on Wednesday and the weekly report on jobless claims on Thursday. Jobless claims have been running at their lowest levels since 2008.

The University of Michigan will issue its final consumer sentiment report on Friday. Gas prices may weigh on the index.
13Comments
Feb 20, 2012 8:55PM
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I'm glad to see you back Charlie. It remains disappointing that the market news is the same old-same old regardless of who is reporting. I wonder what the Vegas odds are on a Greek default next month? Also if gas prices depress travel, tourism is out for the summer and another season of stay-cations for the masses. The only consumer spending will be freshening up the back yard and travel DVD's to make up for the freedom to visit places like we used to.
Feb 20, 2012 7:57PM
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With a Greece debt problem nearly solved (for the moment) and Congress finally moving some bills on to the POTUS .. it might mean dysfunctional politicians in Europe and America have finally heard the distant thunder of the election booths.  Now all we need is corporate America to get spooked at the mattress stuffing and get busy with making a profit on their green backs, before the dollars get moldy and nobody wants the funny money.
Feb 20, 2012 8:47PM
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My guess is that the market will have a huge pullback/ crash once everybody gets back in.  This is how the market works folks!  Everybody that pulled their funds last fall at the worst possible time will get back in at the worst possible time.  The big banks know exactly how much and at what level the masses got in.  Just don't be the last fool in! 
Feb 21, 2012 11:37AM
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Nice to see you back Charlie.....Made mention of you a couple times elsewhere.  And figured if MSN, starts getting rid of some of you guys, Antman,Jubaki,Fletch​ and Brush; I was going to head some where else too........

Keep up the good fight and the good work....re-tog

Feb 21, 2012 12:42PM
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Plenty of behinds burning down here...Funny actually, we hit 13,000 intraday, you should see these scumbags, chaos city, they just called to sell, sell, sell...Not happy campers at all....Now they will do their thing for a while. Unreal but, funny nevertheless. We need the S&P to hit 1400.
Feb 21, 2012 11:03AM
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Just be cautious this morning; yes, futures were up but those don't mean a thing. Manipulators outnumbering us all on and off the floor. After the last few weeks it is not a surprise. These scumbags are furious and desperate, Dow 13,000 is within reach. At 0945 hrs they called to sell, not waiting long today...Oh well, still early, we will see what happens.
Feb 21, 2012 5:24AM
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Oh and Charley, sorry to hear that you got demoted to the night shift.  A well deserved demotion I'm sure! LOL

Feb 21, 2012 5:19AM
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Well I'm off with my wife and kids to a beautiful and relaxing 1 week vacation retreat to beautiful British Columbia. Ahhhh.....

 

May you all lose all your money in the fraud street casino!

 

I won't miss any of you!

 

P.S. I called nurse Ratched and told her where you all were. Hopefully upon my return, she will have rounded you all up and taken you back to your looney bins.

 

Farewell bozos!

Feb 21, 2012 5:06AM
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It's official,....170 billion dollar bailout for Greece. I know what I'd do with that money! I just wonder how many nukes I could purchase? Anyone know who has the best deals?
Feb 20, 2012 9:14PM
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Being an ex military person, last weekend I watched some old reports about the raise of the 3rd reich in Germany and I can already see signs of the times, if history repeats itself, we are definitely going back there again except this time it starts here in the US with a commander who don't have a clue about what we all are about to face. Like it or not, put this statement in a capsule and open it in only 5 years, hoping you are still around and you will see how blind our politicians made us.
Feb 21, 2012 4:45AM
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Screw the Stock Markets!

Screw the Stock Traders!

Screw the Shareholders!

Screw the Bankers!

Screw the Lawyers!

Screw the Big Corporations!

Screw the Insurance Companies!

Screw the Pharmaceutical Companies!

Screw the Real Estate Agents!

Screw the Military!

Screw the Military Complex!

Screw the Government!

Screw the Politicians!

Screw the Republicans!

Screw the Libertarians!

Screw the Neo-Cons!

Screw the Tea Partiers!

Screw the Democrats!

Screw the Liberals!

Screw the Rich!

Screw the Middle Class!

Screw the Poor!

Screw the Disabled!

Screw the Retarded!

Screw the Tax Evaders!

Screw the Polluters!

Screw the Drug Dealers!

Screw the Drug Addicts!

Screw the Murderers!

Screw the Thieves!

Screw the Rapists!

Screw the Adulterers!

Screw the Liars!

Screw the Greedy!

Screw the Gamblers!

Screw the Risk Takers!

Screw the Prostitutes!

Screw the Perverts!

Screw the Rednecks!

Screw the Racists!

Screw the Atheists!

Screw the Agnostics!

Screw the Homosexuals!

Screw the Tattoo Wearing Freaks!

Screw the Body Piercing Wearing Freaks!

Screw the People!

Screw the United States!

Screw the Nations!

Screw the World!

 

 

and..... most importantly,

 

Screw all of you!

Feb 20, 2012 8:54PM
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gas and oil blah blah legalize weed and make billions for state gov'ts. we need a new tax base and this is a radical solution to a radical problem
Feb 21, 2012 4:52AM
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A vote for the Republicans is vote for the warmongering Nazi corporate fascist regime! Hang all these treasonous and terrorist traitors of the U.S.A.
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