Investors to Keep Focus on Corporate Earnings
Regardless of the action by the Federal Reserve this week, investors probably will be focused on sagging corporate profits. Despite a heavy calendar of economic reports and the Fed’s two-day Federal Open Market Committee meeting ending Wednesday, the bottom line for stocks next week is literally that--what companies are earning and whether there are signs the slide in profits is coming to an end.
Given the recent trend of profit warnings--including Friday’s startling forecast by drug giant Merck & Co., pillar of defensive investing--the market is not optimistic about a near-term resumption of the late 1990s’ strong profit growth.
In the technology sector, 3Com Co. is scheduled to report fiscal fourth-quarter earnings after the market closes Tuesday, along with hand-held electronic device maker Palm Inc.
Both are among the legion of companies that in recent weeks have told investors to lower their financial expectations.
On Thursday, Nike Inc. and FedEx Corp. report quarterly results.
Leading off a week packed with economic data today is the National Assn. of Realtors existing home sales for May, which is expected to slip to a 5.15 million annual rate from the previous reading of 5.2 million.
Other economic data this week:
* Tuesday, the Conference Board will issue its June index of consumer confidence. It stood at 115.5 in May.
* Tuesday, the Commerce Department will report on new single-family home sales for May.
* Tuesday, the Commerce Department is expected to report on May factory orders for durable goods. They fell 5% in April.
* Friday, the Commerce Department will issue revised figures on U.S. economic growth for the first quarter. Its initial report showed gross domestic product increased at a 1.3% annual rate.
