8 Dow Components to Report Earnings
With a key report on consumer prices due and eight of the 30 Dow Jones industrials reporting earnings, the week ahead should give investors important insights into the state of the economy and hopefully shake Wall Street out of its post-holiday funk.
Wednesday’s consumer price index reading from the Labor Department, if it follows the trend of lower prices from other economic reports, should ease Wall Street’s inflation fears considerably, despite oil prices that have shot past $48 a barrel.
And investors will look closely at earnings for hints of how companies feel about their prospects in 2005. Steady profits through 2004 and promises of a repeat performance in the coming year would set the stage for a decent rally in stocks after two weeks of losses to open the year.
Last week, a sharp climb in crude oil futures, mediocre earnings and a mix of economic data served to roil the markets, as investors held off on any major investments until a better view of the economy could be discerned. On Friday, the markets staged a modest rally after the Labor Department reported a larger-than-expected drop in wholesale prices, staving off fears of inflation.
For the week, the Dow fell 0.43%, the Standard & Poor’s 500 index was down 0.14% and the Nasdaq composite index lost 0.03%.
The consumer price index, a measure of how much Americans pay for goods and services, is expected to climb just 0.1% for December, less than the 0.2% reading in November. With food and energy prices removed from the equation, so-called core CPI is expected to rise 0.2% because oil prices fell substantially in December. November’s core CPI rose 0.2% as well.
On Friday, the University of Michigan will release its preliminary consumer sentiment index for January, which is expected to come in at 98, a slight rise from the 97.1 reading last month. A rise in the index means that consumers are more confident in the strength of the economy.
For a holiday-shortened week, there will be plenty of earnings reports coming out. In addition to the eight Dow companies, two major U.S. automakers, a slew of airlines, key technology companies and three financial giants will all report earnings in the week ahead.
Wall Street was very disappointed last week with General Motors Corp.’s 2005 outlook, which called for earnings-per-share between $4 and $5. Analysts said that figure, a sharp decline from expected 2004 earnings, still could be too optimistic. GM has fallen steadily over the last year, dropping 31.6% from its 2004 high of $54.27 to close Friday at $37.13. The Dow component is expected to report earnings of 92 cents a share Wednesday, a sharp drop from $1.47 a year ago.
Rival automaker Ford Motor Co. will issue earnings Thursday. It is expected to have earned 28 cents a share, compared with 31 cents a year ago.
Dow components J.P. Morgan Chase & Co. and Citigroup Inc. will lead a number of financial sector earnings reports in the week ahead. On Wednesday, J.P. Morgan Chase is expected to announce earnings of 68 cents a share, down from 89 cents a year ago.
Citigroup, meanwhile, is forecast to report earnings of $1.02 a share Tuesday, up from 96 cents in the year-ago quarter.
Among other notable companies in the financial sector, Bank of America Corp. is expected to report earnings of 95 cents Tuesday, up from 92 cents a year ago.
IBM Corp. leads off a busy week for the technology sector, and is expected to report earnings of $1.74 a share Tuesday, up from $1.54 last year. Other technology companies reporting in the week ahead include Internet portal Yahoo Inc., online auctioneer EBay Inc., cellphone component maker Qualcomm Inc. and chip maker Advanced Micro Devices Inc.
Investors will also focus on airline stocks, with at least half a dozen reporting earnings this week, to see if anyone else will follow Delta Air Lines Inc.’s lead in slashing fares and cutting already-slim margins in the face of a massive surge in jet fuel prices. Other airlines reporting this week include American parent AMR Corp., Southwest Airlines Co. and Continental Airlines Inc.
The other Dow components reporting earnings in the week ahead are:
* Industrial giant 3M Co., reporting Tuesday and expected to have earned 90 cents a share, up from 77 cents a year ago;
* Pharmaceutical bellwether Pfizer Inc., expected Wednesday and forecast to have earned 58 cents a share, up from 53 cents a year ago;
* Engine and aerospace manufacturer United Technologies Corp., due Friday and expected to have earned $1.27 a share, up from $1.16 in the year-ago quarter; and
* General Electric Co., also scheduled for Friday. It’s forecast to have earned 50 cents a share, compared with 45 cents last year.
From Associated Press
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The Week Ahead
Today
* Martin Luther King Day. U.S. financial markets, government offices, schools and most businesses closed.
* U.S. Conference of Mayors opens three-day meeting in Washington.
Tuesday
* Pretrial hearings begin in trial of former WorldCom executive Bernard J. Ebbers.
* N. Gregory Mankiw, White House economic advisor, addresses Council on Foreign Relations on Social Security.
* Treasury bill auction.
* Fed Gov. Susan Schmidt Bies speaks in Baltimore on retirement savings and the economy.
* Motorola Inc., Advanced Micro Devices, IBM, Yahoo issue quarterly reports.
Wednesday
* Senate Energy Committee holds hearing on nomination of Samuel W. Bodman to be Energy secretary.
* Council on Foreign Relations hosts forum on nanotechnology.
* Lucent Technologies Inc., EBay issue quarterly reports.
* Commerce Department reports on housing starts for December.
* Labor Department reports on consumer price index for December.
* Labor Department reports on weekly jobless claims.
* Federal Reserve releases a survey of regional economic conditions.
Thursday
* Inauguration of president and vice president. Financial markets open. Government offices closed in Washington.
* Freddie Mac reports on mortgage rates.
* AT&T; Corp., UnitedHealth Group Inc. issue quarterly reports.
* Conference Board reports its monthly leading economic indicators index.
Friday
* Centrists.org hosts forum on Social Security at Dirksen Senate Office Building.
* University of Michigan gives a preliminary reading on January consumer sentiment.
