Earnings season brings out the big guns

Apple, IBM, Intel, Citigroup, Bank of America and Wells Fargo will announce earnings reports. The Fed weighs in with a snapshot of the economy. And then there's Europe. Kinder Morgan's deal to buy El Paso may set off new takeover speculation.

By Charley Blaine Oct 14, 2011 9:48PM
Updated: 8:20 p.m. ET Sunday

You would not be alone if you wondered if this past week's big stock market rally can continue next week.

The Standard & Poor's 500 Index ($INX) had its best week in more than two years. The month is shaping up as the best October since 2002 and among the best Octobers ever.

The reasons: The business and political powers in Europe have started to focus on containing the Greek debt crisis. The U.S. economy has signaled it is more resilient than thought. And Google (GOOG) and Apple (AAPL) in earnings and sales are suggesting the third-quarter earnings season might not be too bad.

The week ahead has a chance of improving the already strong performance of the markets. Futures trading late Sunday suggests stocks will open modestly higher on Monday. There should be a lot of excitement about deals on Monday after natural-gas-pipeline operator Kinder Morgan (KMI) said it would buy rival El Paso (EP) for $21.1 billion in cash and stock.

The key to the week is whether earnings come in strongly. It is a big week with results due from Apple, IBM (IBM), Citigroup (C), AT&T (T), Microsoft (MSFT), Union Pacific (UNP), General Electric (GE) and McDonald's (MCD).

Article continues below.
In all, earnings are expected from 13 components of the Dow Jones Industrial Average ($INDU) and 96 S&P 500 companies. There are a slew of economic reports due on manufacturing, housing and inflation. The Federal Reserve Board will publish its Beige Book report, a narrative look at the economy.

There are risks for investors besides all the earnings. Europe is probably the biggest. China is a worry. There are still big concerns about banks both at home and abroad.

Energy prices could become a concern. Light sweet rude oil (-CL) in New York was up 4.6% last week and is up 9.6% for the month. Brent crude was up 11.6%.

It's important because gasoline is priced off Brent, and Brent right now commands a premium of more than $28 a barrel over light sweet crude.

Here's how the week shakes up.

The earnings to watch
Monday
: First Horizon National (FHN), the Tennessee banking company; Wells Fargo (WFC), oilfield services giant Halliburton (HAL) and IBM (IBM). First Horizon is seen reporting better than expected results. Halliburton is subject to the vagaries of the global energy market. IBM is expected to deliver strong results and better results; the stock closed at $190.53 on Friday, an all-time high.

Tuesday: Bank of America (BAC),  Coca Cola(KO), Goldman Sachs (GS), Intel (INTC), data storage company EMC (EMC) and Apple.  Apple often rises ahead of its report, and it always low-balls guidance. The stock has often surged a week or two after reporting. Bank of America, struggling with its disastrous merger with Countrywide Financial, may start quantifying new costs. Goldman Sachs shares are down 42% this year as financial companies worry about Europe and slumping revenues in investment banking and trading.

Wednesday: Morgan Stanley (MS), US Bancorp (USB), United Technology (UTX), and American Express (AXP). Morgan Stanley is the company many are worried about because of its exposure to Europe.

Thursday: A monster day with reports due from AT&T, Capital One (COF), Chipotle Mexican Grill (CMG), Eli Lilly (LLY), Microsoft, SanDisk (SNDK) and Southwest Airlines (LUV). Chipotle, SanDisk and Microsoft are probably the key reports.

Friday: GE, Honeywell International (HON), Manpower (MAN), oil-services company Schlumberger (SLB) and Verizon Communications (VZ). GE and Schlumberger may be the keys. Manpower, however, will offer a unique perspective about the jobs market.

The economic reports
Empire Manufacturing, due Monday from the Federal Reserve Bank. It's slowed in recent months.

Industrial production for September, due Monday from the Commerce Department. Look for a small decline. After gains in July and August, auto production tail off.

Producer Price Index and Consumer Price Index for September, due Tuesday and Wednesday, respectively, from the Labor Department. The headline number will be lower on both days because food and fuel prices were lower. Take energy and good out, there will be little change, says Nomura Securities.

Housing starts and building permits, due Wednesday from the Commerce Department. Look for small gains, driven by rebuilding efforts in communities hit by hurricanes.

The Fed's Beige Book report, due Wednesday from the Federal Reserve. The tone of the report should be less pessimistic than other, earlier pronouncements from the central bank, Nomura Securities thinks. But there will be ample anecdotes of companies "exhibiting restraint -- in both hiring and capital investment."

Initial jobless claims, due Thursday from the Labor Department. Don't be surprised if the number drops below 400,000.

Philly Fed Survey for October, due Thursday from the Federal Reserve Bank of Philadelphia. The index jumped in September after a big August contraction. Look for moderate improvement.

Existing-home sales, due Thursday from the National Association of Realtors. Declines in pending home sales suggest the sales report will contract.

Leading economic indicators, due Friday from the Conference Board. Look for a small gain.
51Comments
Oct 16, 2011 10:42PM
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Active, that would be fine if it wasn't just folks like me and you paying income tax, We gotta get US to work and everybody that has income got to contribute more than they are. There aren't enough rich around by the numbers to make light work of this deficit reduction. Yes they can and should help but, the folks I hang with say fix the leaks in the ship of state and we won't mine manning the pumps. Can't argue with them on that since we are all victims of the " We have got to pass this bill so we can see what's in it"  -Nancy Pelosi on Obamacare legislation, political attitudes. I have more confidence in my ability to win a lottery without purchasing a ticket than I have in Congress passing meaningful economic reforms.
Oct 17, 2011 12:00AM
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Thinking  ummm, really? ...

 

"fox news tells it both way's they are more trust worthy "

 

so you think that a company owned and controlled by a single uber-wealthy, uber-greedy, uber-conservative foreigner, rupert murdoch, will provide you with unbiased, trustworthy news and discussions that are not slanted to his benefit?

 

you think a company intricately structured so as to never pay a dime in US corporate income tax has America's well-being in mind?

 

have you ever heard the term "brain-washing?"  Confused

 

 

Oct 14, 2011 11:29PM
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Next week could prove interesting. The rally could continue on developments in Europe where the ECB has approved short term loans to under-capitalized banks in the event of an emergency or Greek default. The only question is ,where is the ECB going to acquire these funds, the IMF is looking for a bail-out itself and the banks in the Euro zone backed out on taking a 21% hit on Greek bond debt today. Looks like kicking the can down the road gets a little bit more complicated every day. With the rise in commodities that all this is creating I'm looking for things on the consumer end to come to a screeching halt right around the onset of the holiday season as cash dries up due to rises in gas and food costs. They're on the edge now.
Oct 16, 2011 3:57PM
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active it seems we see eye to eye that was pre nobama2012, people are fighting the wrong fight 30/70......nobama201​2's policies in all aspect's are wrong and way out of order, JOB'S and economic problems should of been before nobama2012care; now i understand he's trying to bring up illegal immigration again just like few month's ago just to get the hispanic vote....so sad!

 

illegal immigration/ campaigning for his job/ job's plan that was a failure before it was written up; he went on vacation so they could quickly write up a jobs plan, he had no plan he had no plans for a job's plan but the gop did and he wouldn't listen.........who's​ coming first for  his action's......he is, not the people, not the country! NOBAMA2012 IS A FAILURE THAT EXCEEDS CARTER!

Oct 17, 2011 6:18AM
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who cares about these crooks.  The taxpayers keep getting screwed by this outfits.

 

The stock market was formed by banks and the Government in the early days.

 

Now the small guys had all their business closed up by the wall street joint ventures.

, building shopping centers and who knows what else.

 

The greed for profit and forced all big business to escape to foreign lands.

 

i guess if their reports are bad i will have to bail them out with some of my tax dollars.

 

 

 

Oct 17, 2011 5:14AM
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Disappointed hmmmmm.......

 

The U.S. government reported Friday that retail sales rose 1.1 percent in September, the biggest gain in seven months.

 

"The retail sales report was encouraging for both the energy market and the health of the general economy," energy trader and consultant The Schork Group said in a report. "Now let's see how long this lasts until European debt concerns send us reeling again."

Oct 15, 2011 11:23AM
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it's about contagion hava and the weakness of the banks
Hot Yes it is Active. The contagion is sovereign debt that is no longer riskless. When banks have to undergo stress tests to see if they can withstand the default of one or more sovereign banks than we have a huge problem. Governments can not continue to lie to their citizens about benefits, entitlements and taxes while printing more bonds that might go into default.  Witness the US last August which came close to default. There are two type of sovereign default. One is obvious, either miss paying interest or redeeming bonds. The other is reneging on benefit contracts with your citizens. The financial community is aghast at the prospect of the first but thinks the second is negotiable. Well, look at Greece. Every wonder why only 50% of the citizens pay the governments taxes? Maybe it's because the feel like they're being lied to and ripped off by the other 50%. Don't tell me to pay my taxes for your child's education, your Christian Crusades or your communities welfare programs and then renege on or reduce my Medicare and Social Security entitlements. I'll retaliate by voting against your special interests or stop paying for them or both just like the Greeks. We don't call them PIIGS because they are admirable creatures. US debt is no longer riskless either.
Oct 16, 2011 1:03PM
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active are you a leftwinger or you just take harsh criticism of a third party to heart and feel you must protect them?

extremist TP member of the House who have formed the totally partisan "me-first country-second" purely political Party of No "republican

the tea party is exactly what they're name  states, "TAXED ENOUGH ALREADY"; now any sane person would appreciate that idea! from what i have seen on NON-LIBERAL news is 50% of occupy wall streeters(all cities) are commies, i've seen mao/ lennon on t-shirt's, i have heard interviews of people talking socialism/ communism/ marxism/ maoism/ the other 50% half of them are truly sane people and are getting screwed by corporate america and have a legit beef, the last half are people who feel they have no clue but as they voted for nobama2012 it was history in the making and they wanted to get their picture taken while in the crowd!

 

the ignorance of the people will be the downfall of their nation!

eg: when you join a union why is it that you are automatically in the democratic bubble(is this freedom) what gives the union boss's the right to stump/ pledge/ donate to the democratic party......uh, job's and these jobs come from tax dollars.....so spend your way out, SOCIALISM AT IT'S FINEST! be indebt/ stay indebt; greece is looking so good right now!

 

Oct 15, 2011 2:02PM
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LOE brings up a good point about the people needing to take back our goverment from '57 States' and his corrupt administration.   When the attorney general of the country is using Stimulus money to buy guns and smuggle them to drug loads in a friendly country, we need to do something.  When the President's party  is accepting millions from Energy companies who then file bankruptcy  a week later, there can be no question of the out right corruption.

 

I do have a question why the so called 99% think it is fair to seize the private property (via government) to redistribute it to the have nots, Karl Marx (Hitler, Stalin, & Mao) style.

 

The far left always seems to restort to violence for their aims.  Take from those that work and give to those that rather not...

 

Next November we will have a choice.  The Socialsim of the Donkey party, or the free market of the Republican one...  The message to business will be clear, re-elect the extremist, led by Obama, and we will have a civil war.  Business will have to respond with massive layoffs.  And we will have the second civil war.

Oct 16, 2011 7:14PM
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of course we are all concerned about obama's shenanigans - but all of that is upstaged by bigger, more important issues that affect ALL AMERICANS and not just the conservative/TP sector ...

if it were reversed with regards to the party, msn would have 10 stories at one time and they would be on every where, that's the problem; fox news tells it both way's they are more trust worthy just the hosts are creepy!Nerd 

active the corruption of this administration is beyond bush's b.s.! i don't believe bush had stories of defrauding the public of a few billion dollars just to satisfy his campaign bundlers, perry will though!

Oct 15, 2011 5:02PM
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OCCUPY WALL STREET!!  OCCUPY MAIN STREET U.S.A.!!  What I really would love to see is possibly two or three million people to occupy the area from the Washington Monument up to and around the Capital!!!  WHAT A FANTASTIC SIGHT THAT WOULD BE!!!  SURROUND 'EM TILL THEY YELL UNCLE!!!!  These old f**ts need to get the hell out of Washington....they have lined their pockets too long and without a "change in the guard", the same old crap will still linger and drain the life-blood of the American People!  I think right now many old timers are really starting to think about whether or not they will be elected. Good!!!!  I really hope they start to sweat a little, 'cause they have been ringing us dry since who knows when!!  VOTE!!! VOTE!!!!  Let's show the government that we are"MAD AS HELL, AND WE WON'T STAND FOR IT ANY LONGER"!!! "Nuff said.
Oct 17, 2011 9:03AM
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Thinking  hmmm ...

 

"This means that anyone who allows the media into persuading him that the Tea Party is bad for the US is a complete, very gullible fool."

 

have you checked the national polls recently?  looks like there are tens of millions (and growing daily) more complete, gullible fools than conservative ideological extremist supporters these days .... tell us, just who is grover norquist and did you vote him in as the Commander in Chief of this new republican roadblock?

Oct 17, 2011 8:52AM
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Thumbs up right with you swags .. very cautious and hedged at this time ... revenue without margins means less profit which wreaks havoc with the old p/e thingie that drives the market.  did you see phillips?  slightly lower sales with an 86% drop in income and it was "in line" so they pushed the stock up today in europe.  insanity imho.

 

we'll see.

 

p.s. thanks for giving me a pass on the political rants - just clearing my head and venting last night as i am stuck here finishing 2010 tax returns (final deadline midnight tonight).

Oct 15, 2011 1:14AM
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Greece, Italy, Ireland, Portugal and Spain, known as the GIIPS, have about 2.9 trillion euros of government bonds outstanding, according to data compiled by Bloomberg. Italy, the third-largest issuer of debt after the U.S. and Japan, accounts for more than half, or 1.59 trillion euros, the data show. About 413 billion euros of GIIPS debt is held by 38 of Europe’s largest lenders, according to an analysis of the stress-test results by Alberto Gallo, a strategist at RBS in London. Those holdings equal almost 40 percent of the banks’ 1.1 trillion euros of equity, according to Gallo. European banks, having agreed to a voluntary loss of about 21 percent, are bracing for further writedowns on Greece’s 288 billion euros of government bonds, which carry Moody’s second- lowest rating of Ca and an equivalent CC by Standard & Poor’s. European officials are considering writedowns of as much as 50 percent on Greek bonds as part of a revamped strategy to combat the crisis, people familiar with the discussions said.
Hot So $100-200 billion of Greek debt goes bad, that's not the end of the world. EU just has to do TARP II and we'll be fine. But if even 20-30% of $3 trillion of PIGS debt  starts to go bad it'll be a real big problem for the EU and US plus all emerging economies. Like the 2nd worst Recession in the last 3 years and it'll all be because socialism has run out of OPM. It could destroy the EU and don't look for Germany to save the dumb French. Oh well, sell for Halloween and stay away til next year.
Oct 15, 2011 6:58PM
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Thinking they are afraid that you guys won't bathe until spring .....

 

seriously, hear you, love the passion, change the world man because stooges like obama et al will never really do it ... Thumbs up

Oct 15, 2011 5:20PM
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BOYCOTT THE HOLIDAY SEASON IF THE MIDDLE CLASS CONSUMER DOES THIS WE MIGHT HAVE A CHANCE OF SAVING OUR BELOVED AMERICA !!!!!!!!!!!!
Oct 15, 2011 9:50AM
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EARNING SEASON BRINGS OUT THE BIG GUNS= HISTORY REPEATS ITSELF= 1929 OCTOBER STOCK MARKET CRASH= WE HAVE ALL BEEN HERE BEFORE= OFF THE CLIFF WE GO !  MAY GOD BLESS AMERICA !
Oct 15, 2011 4:48AM
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I don't know  hmmm ...

 

"...and it'll all be because socialism has run out of OPM"

 

coming from the capitalist USA with almost 100% of annual GDP in hock, and our third almost unthinkable $1 trillion annual budget deficit in a row, isn't that a bit like the pot calling the kettle black?  living in a glass house and throwing stones?  taking one to know one?  what's good for the goose ....  etc. 

 

it's about contagion hava and the weakness of the banks.  dexia was ranked strongest under the stress tests and it just vaporized. if the contagion (weakness and defaults and credit crunch) widens then that means recession in the word's largest economy (euro zone) and that pressures china world's number three into recession and ..... pretty soon you are talking real money ... and the US ....

 

i am no raving bear ... probability is still a low-growth scenario ... just pointing out that ignoring the POSSIBILITY of a very harmful downturn is imprudent .... there is a reason i have a boxful of American Eagles with the rest of my basement bunker supplies ....

 

have a good one. Martini glass

Oct 17, 2011 6:00AM
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Active,

 

All "seasonally adjusted" BS.  It was actually a decline, dollar for dollar, from Aug to Sept.

Oct 15, 2011 1:17AM
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And then there's a scenario... ALL of the above named are bailouts by us! They as a corporation cannot upheld themselves! I am employed for a small company, and we work! None of the above do!!!!!!!!!!!!!!!!!!​ Bottom line!! Get a life and don't stick us with it!
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