Investors will watch Fed minutes, sales report
SAN FRANCISCO (MarketWatch) — With first-quarter earnings season on its way out, macroeconomics will retake the front seat next week in U.S. stocks.
Next week’s standouts include retail sales figures and the minutes of the latest U.S. Federal Reserve’s last policy meeting, analysts said.
Retail sales are seen as weak, taking some of the luster from Friday’s higher-than-expected increase for a gauge of consumer sentiment.
The upbeat number helped offset some of the early losses on the wake of a $2 billion trading loss for J.P. Morgan Chase & Co. (NYSE:JPM)
In the end, however, stocks mostly declined Friday, with the Dow Jones Industrial Average (DJI
JIA) off 34.44 points, or 0.3%, at 12,820.60. The S&P 500 (SNC:SPX) also ended lower, down 4.6 points, or 0.3%, at 1,353.39.
The Nasdaq Composite (NASDAQ:COMP) bucked the trend, if barely, up 0.2 point at 2,933.82. Stocks posted their second weekly decline in a row, with the Dow off 1.7% in the five-day period.
The news of J.P. Morgan’s blunder dominated early trading Friday, but is unlikely to cast a pall over financial stocks in the coming week, said Phil Orlando, chief equity market strategist at Federated Investors in New York.
Likewise, Cisco Systems Inc.’s (NASDAQ:CSCO) warning earlier in the previous week about its “cautious” spending in information technology will be likely limited to that company, not to the technology sector as a whole, Orlando said.
They were company-specific news that by late Friday had already been discounted by the markets, he added.
In the macroeconomic front, also on tap for next week are reports on U.S. consumer prices, U.S. industrial production, and an index grouping some key U.S. macroeconomic indicators.
Stuart Freeman, chief equity strategist with Wells Fargo Advisors in St. Louis, is keen on the weekly jobless claims numbers, which will provide more clues about one of the top market preoccupations.
All in all, he sees the reports are largely favorable. “The economy is further along down the path” of recovery, Freeman said. “The U.S. economy continues to be quite resilient despite the issues in Europe.”
Unlike previous years, the “sell in May and go away” adage won’t be so readily applicable for this summer, he said. While some volatility is to be expected, the slow but steady pace of the recovery, and more liquidity into the markets, will hold investor’s interest, he said.
Wells Fargo Advisors has placed its larger bets onto technology, materials, and consumer discretionary sectors, and it remains underweight on financials, he said.
Looming large next week is the Wednesday release of Federal Open Market Committee minutes of the latest meeting, likely to contain little surprises but just as likely to command Wall Street’s attention.
With the Federal Reserve’s bond-buying stimulus program, Operation Twist, expiring at the end of June, investors will be parsing the minutes for any hints of what’s next for the Fed.
“It is worth noting that at the meeting, the FOMC did not have the rather weak April employment report, so the tone may appear a bit hawkish,” analysts at RBC Capital Markets said in a note to clients.
Fed officials are likely to be reluctant to provide much, preferring to wait till June to give the market any real clues, said Bill Ryder, director of quantitative strategy at Riverfront Investment Group in Richmond, Va.
“Minutes for the last year or so have tended to have a very short-term effect in the market,” he said. That is likely to be the case on Tuesday, he said. “The Fed will try hard not to let anything of consequence slip into these minutes.”
Meanwhile, first-quarter earnings season winds down next week with Home Depot Inc. (NYSE:HD) and Wal-Mart Stores Inc. (NYSE:WMT) among the largest companies scheduled to report.
Of the 453 companies in the S&P 500 that have reported earnings so far, 66% have reported earnings above analyst expectations, and nearly 10% reported in line with the forecasts, analysts with Thomson Reuters said. Nearly a quarter have reported misses, the analysts said.
Consumer-discretionary companies have reported above expectations the most, with 80% of the firms reporting beyond analysts estimates. Utilities is the sector with the most misses, with 44% of companies reporting above forecast, according to Thomson Reuters.
Meanwhile, problems in Europe are the week’s wild card for equities. Markets will wait for the latest gross-domestic-product figures out of the euro zone, due Tuesday.
First-quarter GDP numbers are expected to show a contraction compared with the previous quarter, “which would confirm a recession,” analysts at Commerzbank said in a note to clients Friday. Germany’s GDP, however, is seen as expanding 0.2% on quarter, the analysts said.
In addition, the meeting between France’s President-elect Francois Hollande and German Chancellor Angela Merkel will be closely scrutinized. Hollande is slated to become the president of France on Tuesday, and is expected to meet with Merkel shortly after.
At home, the conservative Merkel faces the possibility of a political setback in Germany’s largest state. In an election Sunday, voters in North Rhine-Westphalia are expected to hand a victory to center-left politicians, and could foreshadow a broader backlash against austerity.
SAN FRANCISCO (MarketWatch) — With first-quarter earnings season on its way out, macroeconomics will retake the front seat next week in U.S. stocks.
Next week’s standouts include retail sales figures and the minutes of the latest U.S. Federal Reserve’s last policy meeting, analysts said.
Retail sales are seen as weak, taking some of the luster from Friday’s higher-than-expected increase for a gauge of consumer sentiment.
The upbeat number helped offset some of the early losses on the wake of a $2 billion trading loss for J.P. Morgan Chase & Co. (NYSE:JPM)
In the end, however, stocks mostly declined Friday, with the Dow Jones Industrial Average (DJI
JIA) off 34.44 points, or 0.3%, at 12,820.60. The S&P 500 (SNC:SPX) also ended lower, down 4.6 points, or 0.3%, at 1,353.39. The Nasdaq Composite (NASDAQ:COMP) bucked the trend, if barely, up 0.2 point at 2,933.82. Stocks posted their second weekly decline in a row, with the Dow off 1.7% in the five-day period.
The news of J.P. Morgan’s blunder dominated early trading Friday, but is unlikely to cast a pall over financial stocks in the coming week, said Phil Orlando, chief equity market strategist at Federated Investors in New York.
Likewise, Cisco Systems Inc.’s (NASDAQ:CSCO) warning earlier in the previous week about its “cautious” spending in information technology will be likely limited to that company, not to the technology sector as a whole, Orlando said.
They were company-specific news that by late Friday had already been discounted by the markets, he added.
In the macroeconomic front, also on tap for next week are reports on U.S. consumer prices, U.S. industrial production, and an index grouping some key U.S. macroeconomic indicators.
Stuart Freeman, chief equity strategist with Wells Fargo Advisors in St. Louis, is keen on the weekly jobless claims numbers, which will provide more clues about one of the top market preoccupations.
All in all, he sees the reports are largely favorable. “The economy is further along down the path” of recovery, Freeman said. “The U.S. economy continues to be quite resilient despite the issues in Europe.”
Unlike previous years, the “sell in May and go away” adage won’t be so readily applicable for this summer, he said. While some volatility is to be expected, the slow but steady pace of the recovery, and more liquidity into the markets, will hold investor’s interest, he said.
Wells Fargo Advisors has placed its larger bets onto technology, materials, and consumer discretionary sectors, and it remains underweight on financials, he said.
Looming large next week is the Wednesday release of Federal Open Market Committee minutes of the latest meeting, likely to contain little surprises but just as likely to command Wall Street’s attention.
With the Federal Reserve’s bond-buying stimulus program, Operation Twist, expiring at the end of June, investors will be parsing the minutes for any hints of what’s next for the Fed.
“It is worth noting that at the meeting, the FOMC did not have the rather weak April employment report, so the tone may appear a bit hawkish,” analysts at RBC Capital Markets said in a note to clients.
Fed officials are likely to be reluctant to provide much, preferring to wait till June to give the market any real clues, said Bill Ryder, director of quantitative strategy at Riverfront Investment Group in Richmond, Va.
“Minutes for the last year or so have tended to have a very short-term effect in the market,” he said. That is likely to be the case on Tuesday, he said. “The Fed will try hard not to let anything of consequence slip into these minutes.”
Meanwhile, first-quarter earnings season winds down next week with Home Depot Inc. (NYSE:HD) and Wal-Mart Stores Inc. (NYSE:WMT) among the largest companies scheduled to report.
Of the 453 companies in the S&P 500 that have reported earnings so far, 66% have reported earnings above analyst expectations, and nearly 10% reported in line with the forecasts, analysts with Thomson Reuters said. Nearly a quarter have reported misses, the analysts said.
Consumer-discretionary companies have reported above expectations the most, with 80% of the firms reporting beyond analysts estimates. Utilities is the sector with the most misses, with 44% of companies reporting above forecast, according to Thomson Reuters.
Meanwhile, problems in Europe are the week’s wild card for equities. Markets will wait for the latest gross-domestic-product figures out of the euro zone, due Tuesday.
First-quarter GDP numbers are expected to show a contraction compared with the previous quarter, “which would confirm a recession,” analysts at Commerzbank said in a note to clients Friday. Germany’s GDP, however, is seen as expanding 0.2% on quarter, the analysts said.
In addition, the meeting between France’s President-elect Francois Hollande and German Chancellor Angela Merkel will be closely scrutinized. Hollande is slated to become the president of France on Tuesday, and is expected to meet with Merkel shortly after.
At home, the conservative Merkel faces the possibility of a political setback in Germany’s largest state. In an election Sunday, voters in North Rhine-Westphalia are expected to hand a victory to center-left politicians, and could foreshadow a broader backlash against austerity.
