Flood of Earnings Reports Due This Week
U.S. stocks look set to glide higher this week, as long as strong fourth-quarter profit reports keep on coming.
But if key companies due to present their scorecards don’t follow through with upbeat forecasts for the rest of the year, investors might look to cash in their gains as the major market indexes crest longtime highs.
“If the current recovery in earnings has legs and continues to be strong, we are only in the early phases of a stock market recovery,” Gordon Fowler, chief investment officer at money manager Glenmede Trust Co., said in his latest outlook.
Stocks have soared since March, when the economy showed solid signs of revival and companies got back into the habit of posting higher profits.
But whether that continues depends on more economic growth and reassurance from corporations that higher profits are here for another year at least.
“Companies need not only to beat the current quarter estimate, but lift guidance for the first quarter or full year 2004 in order to gain investor attention,” Frederic Dickson, chief market strategist at fund firm D.A. Davidson & Co., said in his latest stock market commentary.
The stock market will be closed today in observance of the late civil rights leader Martin Luther King Jr.’s birthday. But the shape of the market will come into focus quickly Tuesday with an avalanche of earnings.
Dow components Citigroup Inc., Johnson & Johnson Inc., 3M Co. and United Technologies Corp. are among those scheduled to report Tuesday, followed by technology bellwether EBay Inc. and financial giant J.P. Morgan Chase & Co. on Wednesday.
Thursday brings Dow members AT&T; Corp., Eastman Kodak Co. and Microsoft Corp.
This week is scant on economic numbers. Housing starts data due Wednesday will give an indication of optimism in the construction industry and an early sign of follow-on demand for consumer goods.
The number of new residential units started in December is expected to fall slightly to 1.96 million, according to economists polled by Reuters, from the 20-year high of 2.07 million reached in November.
On Thursday, the government releases the weekly number of people filing for unemployment insurance for the first time. Economists expect the number to rise slightly to 347,000, but stay well below the key 400,000 four-week average level.
Also Thursday, the Conference Board releases its leading indicators gauge. The index, which foreshadows economic activity in the next three to six months, is expected to rise 0.2% for December.
