What's ahead for the stock market
In a big week for earnings, IBM, Apple, Bank of America and Caterpillar are among the headliners. Reports are due on housing starts, existing-home sales and mid-Atlantic manufacturing. The debt ceiling fight will continue. Will gold top $1,600?
July has been a weird month. Not because the stock market is down, which it is.
And not because the results for earnings season have been bad. Earnings have been OK, except Google (GOOG), which astonished all of Wall Street.
No, the month has been weird because the apparent risks have been growing and the markets apparently are ignoring them -- except to push gold ever closer to $1,600. The big risk is that the United States will default on its debt some time after Aug. 2, and no one knows exactly what will happen.
It's not quite true that the market has ignored the threats; there just wasn't a lot of panic. The 24 stocks in the KBW Philadelphia Bank Index ($BKX) fell back, and the index ended down 4.2%. Some key technology stocks were higher, especially Apple (AAPL) and Google, but only nine stocks in the Nasdaq-100 Index ($NDX.X) were higher. National Semiconductor (NSM) was the sole stock in the Philadelphia Semiconductor Index ($SOX) to show a gain for the week.
Next week will challenge that lack of panic. Fourteen of the 30 companies in the Dow Jones Industrial Average ($INDU) will report; 108 members of the Standard & Poor's 500 Index ($INX) will report. There is the potential for one spectacular report -- from Apple -- but the financial companies may disappoint, especially Bank of America (BAC). Both report on Tuesday.
There are some important economic reports due that may tell us if the economy is getting past its soft patch, and there's all that rhetoric over the debt ceiling, with the government facing an Aug. 2 deadline -- more or less -- before it starts to deal with cash shortages.
Article continues below.
The Dow ended down 1.4% for the week, with the S&P 500 off 2.1% and the Nasdaq down 2.5%. It was the worst week for the major averages in about a month and broke a two-week winning streak.
Futures trading suggests a lower open for European and U.S. stocks, with the Dow looking at opening down 54 points. Gold was trading at nearly $1,600 in electronic trading early Monday.
Here's how the earnings will play out:
Monday: IBM (IBM), Halliburton (HAL), Hasbro (HAS) and Steel Dynamics (STLD). IBM and Halliburton are the keys. IBM, by virtue of its big consulting business, is a gauge on corporate technology spending globally. It's clear many investors love Big Blue; shares are up nearly 20% on the year, second-best among the Dow stocks after American Express (AXP). Oil-services giant Halliburton is also a hot stock, up 30% for the year. Strong results from it will boost Schlumberger (SLB) later in the week.
Tuesday: Heavy on the financials, with Bank of America, Wells Fargo (WFC), State Street (STT), Comerica (CMA) and Goldman Sachs (GS). Then, there's Apple, railroad giant CSX (CSX) and Yahoo (YHOO).
The keys will be Bank of America and Goldman Sachs. Bank of America, expected to show a loss of 90 cents a share and a big revenue decline, is really struggling from the Countrywide Financial acquisition, which saddled the company with a horrendous loan portfolio and lawsuits beyond belief. Goldman Sachs has its own public-image problems, but its results will depend on whether its investment banking business can offset expected declines in trading.
Apple will cheer investors up with projected earnings growth of 65% and revenue growth of nearly 59%.
Chipotle Mexican Grill (CMG), up 53% this year, also reports.
Wednesday: American Express, Blackrock (BLK), Intel (INTC), Qualcomm (QCOM) and United Technologies (UTX). American Express is up 21% this year as loan losses have declined and customers have used their cards more often. Intel is probably the key because of worries that the semiconductor market is stuffed with way too many chips. Plus, it sells most of its chips to Japanese electronics manufacturers. A big question is whether the earthquake is still weighing on Japanese business.
Thursday:AT&T (T), Eli Lilly (LLY), Sherwin Williams (SHW), Travelers (TRV), PPG Industries (PPG) and Microsoft (MSFT) are the key reports. PPG is a proxy for industrial America, making paints and coatings, chemicals and various glass products. AT&T will be closely examined to see how it's coping now that Apple is selling the iPhone to rival Verizon Wireless. Microsoft, the publisher of MSN Money, will be compared with Google. It's the second-best Dow performer in July, with a 3% gain. Google is up 18% for the month, with most of the gain coming at the end of this past week.
Friday: Caterpillar (CAT), General Electric (GE), McDonald's (MCD) and Schlumberger (SLB). All are big multinational companies that generate most of their revenue outside the United States. Caterpillar will be the key report to watch for its comments about business in China and elsewhere in Asia.
|Markets for the week|
|7/15/2011||7/8/2011||% chg.||YTD chg.|
|U.S. Dollar Index||75.52||75.51||0.01%||-$0.05|
The economic reports: heavy on housing
Here's what's scheduled:
Builder sentiment, due Monday from the National Association of Home Builders. It was 13 in June, the lowest level in a year. Don't expect much improvement in July. Too many houses and too much job uncertainty.
Housing starts and building permits for June, due Tuesday from the Commerce Department. Housing starts may rise a little to 572,000, building on a gain in May. Permits may fall a little because of a 21% gain in May. Apartments are the name of the game right now, and rents are rising.
Existing-home sales for June, due Wednesday from the National Association of Realtors. Sales should rise a little to an annualized rate of about 5 million units, according to Nomura Securities. May's sales rate of 4.8 million units was a six-month low, IHS Global Insight noted.
Philly Fed Index, due Thursday from the Federal Reserve Bank of Philadelphia. This is a widely watched gauge of manufacturing. The June report was quite weak, with the disruptions caused by the March earthquake in Japan cited as the cause. Most economists see the index improving.
Initial jobless claims, due Thursday from the Labor Department. Claims fell for the second week in a row and dropped to 405,000. Nomura Securities thinks that was mostly due to retooling in the auto industry.
Leading economic indicators due Thursday from The Conference Board. Look for a small gain, with weakness in stocks and consumer confidence.
|Key earnings in the week of July 18|
|Gannett (GCI)||Before the market open|
|Halliburton (HAL)||Before the market open|
|Hasbro (HAS)||Before the market open|
|IBM (IBM)||After the close|
|MGIC Investment (MTG)||Before the market open|
|Steel Dynamics (STLD)||After the close|
|Zions Bancorp. (ZION)||After the close|
|Apple (AAPL)||After the close|
|Bank of America (BAC)||Before the market open|
|Chipotle Mexican Grill (CMG)||After the close|
|Coca Cola (KO)||Before the market open|
|CSX (CSX)||After the close|
|Goldman Sachs (GS)||Before the market open|
|Harley Davidson (HOG)||Before the market open|
|Johnson & Johnson (JNJ)||a.m.|
|Novartis (NOVN)||Before the market open|
|Peabody Energy (BTU)||Before the market open|
|Stanley Black and Decker (SWK)||After the close|
|Wells Fargo (WFC)||Before the market open|
|Yahoo (YHOO)||After the close|
|American Express (AXP)||After the close|
|Blackrock (BLK)||Before the market open|
|Cheesecake Factory (CAKE)||After the close|
|Intel (INTC)||After the close|
|Noble (NE)||After the close|
|Qualcomm (QCOM)||After the close|
|Seagate Technology (STX)||After the close|
|US Bancorp (USB)||Before the market open|
|United Technologies (UTX)||Before the market open|
|AT&T (T)||Before the market open|
|Baxter International (BAX)||Before the market open|
|BB&T (BBT)||Before the market open|
|Blackstone Group (BX)||Before the market open|
|Danaher (DHR)||Before the market open|
|Eli Lilly (LLY)||Before the market open|
|Microsoft (MSFT)||After the close|
|Nucor (NUE)||Before the market open|
|Pepsico (PEP)||Before the market open|
|Sherwin-Williams (SHW)||Before the market open|
|Travelers (TRV)||Before the market open|
|Union Pacific (UNP)||Before the market open|
|US Airways (LCC)||Before the market open|
|VF Corp. (VFC)||Before the market open|
|Whirlpool (WHR)||Before the market open|
|Caterpillar (CAT)||Before the market open|
|General Electric (GE)||Before the market open|
|Honeywell International (HON)||Before the market open|
|McDonalds MCD)||Before the market open|
|Schlumberger (SLB)||Before the market open|
|Suntrust Banks (STI)||Before the market open|
|Verizon Communications (VZ)||Before the market open|
Consumers not spending, aha! Make my day. The Perfect Storm is underway!
The U.S. is – right now – in a desperate financial situation. The combination of events – including the stalled talks over raising the debt ceiling…the potential collapse of the U.S. dollar…and even the potential for housing prices to fall again – is unlike anything I've ever seen. Remember the words we’ve heard before: “Prosperity is around the corner”, and now the words of the Obama administration and Fed’s Bernanke: “There will be no double dip in the economy”. I tell you we’re in worst case setting, already.
Budget (and Debt) talks are halted, Euro crisis widens, China's growth slumps, high unemployment rates, still slumping house market, US growth slumps, Banks under revise, foreclosures, and finally consumers on hold spending. Yeah, what more do we need to bring in The Perfect Storm?
It is underway to strike any moment from now. Be careful out there!
Boehner said he'd favor increasing the Social Security retirement age to 70 for people who have at least 20 years until retirement, tying cost-of-living increases to the consumer price index rather than wage inflation, and limiting payments to those who need them.
Those that need them? I think that everyone that paid something thinking they're going to get something should get them. This guy is an absolute fool and needs to go back Ohio.
Make my day. The Perfect Storm is underway!
The U.S. is – right now – in a desperate financial situation. The combination of events – including the stalled talks over raising the debt ceiling…the potential collapse of the U.S. dollar…and even the potential for housing prices to fall again – consumer spending on hold - high unemployment rates - foreclosures - China's growth slumps - Euro crisis widens - is unlike anything I've ever seen.
It is underway to strike any moment from now. Be careful out there!
Fatuus, I would accept an increase in taxes only on 3 conditions. First and foremost - the government proves that it can cut spending, and it must do this first and do it for a year before discussions resume about raising taxes. Second - that any tax increases,elimination of cuts, etc. are not directed only at the wealthy. They already pay the vast majority of tax revenue while 50% of the country pays none and some of that percentage even receives 'refunds' (how do you get a refund when you paid no tax in the first place?). Everyone but the most indigent should pay SOMETHING towards taxes. Third - any increase in tax revenue (other than what is generated from an increase in income), goes directly towards paying off the deficit and then the tax increase is to be immediately removed upon payment of the debt.
The bottom line is that is time for the government to bite the bullet, get out of our lives and stick to the basics. I got fed up reading about how the local governments here in Ohio were crying because of budget cuts, some largely due to lost federal funding that the new governor refused. The way I see it, NO local government had any business relying on federal funding for anything other than infrastructure of emergency projects. Let's face it, when it comes to tax dollars, everyone has their hand out and too many take more than their fair share.
When, in the course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the laws of nature and of nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it, and to institute new government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness. Prudence, indeed, will dictate that governments long established should not be changed for light and transient causes; and accordingly all experience hath shown that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same object evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security. --Such has been the patient sufferance of these colonies; and such is now the necessity which constrains them to alter their former systems of government.
You realize that the mighty USofA is now in the same category as Greece and Italy......scary
'Easiest way to split the Atom...give it to a politician and tell him not to break it'
It's not that hard to cut the budget by $9 trillion over the next 10 years:
1) Defense - Cut by $100b year or $1 trillion over 10 years
2) Discreationary Speeding - Cut by $200 billion (already identified by Biden group) year or $2 trillion over 10 years
3) Medicare, Medicaid, Social Security - Cut by $100 billion year by raising age to 68 over 12 years and 69, 70 each next 24 years, reducing COLA for those under 70 and increasing Medicare/SSA taxes by 1% over next 20 years
4) Bush 3% tax cuts expire in 2013 - $370 billion or $3.7 trillion over 10 years
5) Interest on Debt - Save $1 trillion in interest by the $7.7 trillion saved in 1-4
Democrats must cut entitlements a little, Republicans must put taxes back, everyone wins
Ah... According to that site that measures future liabilities they may be right.
All the more reason for a balanced budget amendment... They better not cave.
"57 States" and the Donkeys own this economy. They created the mess, these few years.
The sooner we get rid of all these Socialists, the better off we will be....
thats real smart vineyard....is that how you work your own finances buy saying screw it lets not pay our bills...then you probably got a 450 beacon score...agreed that spending needs to be cut ...but saying screw it im not going to pay my bills isnt the way to fix it...
I am questioning your number of 534K in debt owed per household.
I am taking 14500 Billion (14.5 trillion) and dividing it by 308 million in the USA. That gives us 47K and change per person. Assuming 4 per household thats 188,000 per household.
Is there a problem with my math? Or are we in far worse debt than the 14.5 Trillion?
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[BRIEFING.COM] The Nasdaq Composite (+0.5%) and S&P 500 (+0.2%) posted modest gains on Thursday, but not before enduring a morning dip into the red, which took place in reaction to reports indicating Russia has commenced military exercises on the Ukrainian border.
The news from Europe knocked the key indices from their early highs, while giving a boost to safe-haven assets like gold futures (+0.5% to $1290.80/ozt), Treasuries (10-yr yield -1 bps to 2.69%), and the Japanese yen (102.30 ... More
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