Stock Investors Look to Earnings, Inflation Data
Equity investors are looking for strong earnings and tame inflation figures this week to help the major stock indexes move up from their negative or flat status for the year so far.
With Hurricane Dennis having reached Florida’s Gulf Coast on Sunday, investors hope the earnings and economic data heading their way can compensate for damage from the storm.
Any disruptions in oil and natural gas production caused by Dennis could harm the stocks of energy companies, and the hurricane could hurt other companies, including some in the insurance, casino, cruise line, boating, retail and roofing sectors, according to a note from Susquehanna Financial Group.
Record earnings from Dow component Alcoa Inc. helped U.S. stocks end last week with strong gains as they bounced back from a temporary slide Thursday in the wake of the bombings in London that killed dozens of people.
Wall Street analysts seem divided on whether the coming week will be good for stocks.
“Retail sales should be strong, the trade deficit should improve and the inflation number should remain somewhat subdued,” said Hugh Johnson, chief investment officer of Johnson Illington Advisors. “The expectation is that second-quarter earnings were 8.6% higher than second-quarter 2004. If I’m right, earnings reports should, like Alcoa, come in better than expected.
“The only things you worry about are the risks -- higher oil prices and any decline in house prices. So, with an eye toward the risks, I think on balance the stock market will move higher.”
However, among the skeptics, Commerzbank Capital Markets said in a note: “Neither June retail sales nor industrial production are likely to be especially strong.”
This week will show whether other companies can follow Alcoa’s example. It also will tell how businesses are coping with rising commodity prices. Oil prices settled close to $60 a barrel Friday after hitting a record $62.10 earlier in the week.
From Associated Press
The Week Ahead
Today
* Quarterly earnings report expected from Genentech Inc.
Tuesday
* Earnings expected from PepsiCo Inc. and Smart & Final Inc.
Wednesday
* The House Armed Services Committee holds a hearing on the $18.5-billion bid for Unocal Corp. by Chinese oil company CNOOC Ltd.
* The Commerce Department reports on the nation’s trade deficit for May.
* Earnings reports expected from Apple Computer Inc. and Advanced Micro Devices Inc.
Thursday
* The Labor Department reports the consumer price index for June.
* Earnings report expected from UnitedHealth Group Inc.
Friday
* The Labor Department reports the producer price index for June.
* The Federal Reserve reports industrial production for June.
* The Commerce Department reports U.S. business inventories for May.
* The University of Michigan releases its consumer sentiment index for July.
* Earnings report expected from General Electric Co.
