Jan. 22, 2011, 12:01 a.m. EST
U.S. stocks face heavy earnings week
NEW YORK (MarketWatch) — The U.S. stock market next week will be listening for hints of what’s ahead in the corporate voices accompanying the next round of quarterly earnings.
The country’s biggest wireless carrier, Verizon Communications Inc. (VZ 34.95, +0.34, +0.98%) , is among those slated to report, with investors expected to also keep tabs on what the company’s executives say at an analysts’ meeting in New York. Read earnings preview for Verizon, Motorola and more.
“Next week, the focus is really going to be on earnings, but the commentary is going to be more interesting for many investors — what are they seeing? What is the outlook for the next couple of months?” said Paul Nolte, managing director at Dearborn Partners.
U.S. Week Ahead: FOMC, earnings
U.S. investors will focus on the Federal Reserve's policy-setting meeting, a rush of economic data and another flood of corporate earnings. Amazon, Microsoft, American Express, DuPont, Ford and Chevron are among the big names reporting.
Sprint Nextel Corp. (S 4.31, +0.04, +0.94%) is expected to follow up with its results on Thursday, two days after Verizon weighs in.
On Friday, Wall Street finished a mixed week that had the Standard & Poor’s 500 Index (SPX 1,283, +3.09, +0.24%) snapping a seven-week winning run.
Two days of losses on Wednesday and Thursday involved the market’s largest decline since late November, and fueled talk that a much anticipated pullback, or correction, had finally arrived.
But analysts tried to put the retreat in context, saying market advances and declines never come in a straight line, and some profit-taking was to be expected after a roughly 25% run-up by S&P 500 from its August low.
“Technical consolidation is healthy, especially in a strong up trend. Market bulls should not want to see equities get too far ahead of themselves,” said Mike O’Rourke, chief market strategist at BTIG LLC.
And while technicians make the argument that triggers aren’t necessarily needed for markets to pull back, those looking for a fundamental reason found it in China, which reported its economy grew 10.3% in 2010 from 2009, aided by faster-than-expected 9.8% expansion in the final quarter.
“It all comes down to a reaction to what is likely to be slower Chinese growth going forward,” said Nolte.
In response, the market shifted its rotation on thinking the global growth engine that is China would again try to keep things from getting overheated by raising its interest rates.
A similar scenario occurred in the stock market in November, a month where the overall stock market was virtually flat as it corrected some of the run-up in the industrial and material sectors to the benefit of defensive laggards, namely utility, health care and big technology names such as International Business Machines Corp. (IBM 155.50, -0.30, -0.19%)
“The correction may be more of a rolling correction where you see prices come down from the leaders to the prior laggards and a market that is not going terribly far in either direction,” said Nolte.
The November rotation, which reversed itself in December, now appears to be back in play, with utilities — the second worst-performing sector in the last 12 months — the best performer last week, followed by health care, the sector that has performed the worst over the past year.
“One of the ways the market can correct is to go sideways for awhile. As the domestic economy gets modestly better you see a market grinding in both directions before starting another leg,” said Nolte.
Economic data in the week ahead include minutes from the last policy-setting meeting of the Federal Open Market Committee, or FOMC, as well as a report on durable goods.
The FOMC minutes will likely be a carbon copy of recent versions, and the durable-goods data will “give us a taste of how the manufacturing sector is doing; it’s part of the reason the economy has continued to do well, we’re seeing it in exports and company reports,” said Nolte.
“As with a lot of the data it’s going to be modestly better, not enough to say economic growth is robust, but we’re certainly not thinking about a double-dip. We’re cruising along at a low altitude,” he said. |
发表于 2011-1-22 13:29
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