Stocks Expected to Stay in Holding Pattern or Fall
Stocks probably will tread water or decline this week as investors brace for a few earnings reports from key companies and take cues from a heavy economic calendar that includes weak July retail sales.
Traders also are seen stepping lightly this week in the run-up to the Federal Reserve’s policy-making meeting Aug. 21. The central bank is expected to cut interest rates by a quarter-percentage point that day.
A number of big companies report earnings this week, including home improvement retailer Home Depot, retailing giant Wal-Mart Stores, top computer-chip equipment maker Applied Materials, computer maker Hewlett-Packard and communications equipment maker Ciena.
As the second-quarter corporate earnings reporting season winds down, investors also will focus on picking apart a number of economic reports that could influence trading.
Key among those is the July retail sales report due Tuesday from the Commerce Department. That data will give an indication as to whether the last pillar of strength, the American consumer, continues to spend.
Households already have started receiving tax rebate checks from the U.S. government, which the pundits say could help fuel a rally down the road as people spend that money.
But for now, the retail sector looks under a cloud. Economists polled by Reuters expect a decline of 0.2% in the July sales figures, compared with a gain of 0.2% in June.
*
Other economic reports due this week:
* Wednesday, the Commerce Department will release its June business inventories report, and the Fed will issue July figures for U.S. industrial production and capacity utilization.
* Thursday, the Labor Department will issue the consumer price index for July. The CPI is a key gauge of retail-level inflation.
* Thursday, the Commerce Department issues data on housing starts during July.
* Also Thursday, the Fed Bank of Philadelphia will report on manufacturing in the mid-Atlantic states.
* Friday, the Commerce Department will report on the trade deficit for June.
* Friday, the University of Michigan releases its preliminary consumer sentiment index for August, another widely watched report.
