Investors’ eyes will focus on earnings
After getting worrisome signs about consumers from bankers’ earnings reports, investors will be looking at a broad range of companies this week for further insights into the outlook for the economy.
Consumer-focused companies including Apple Inc., McDonald’s Corp., appliance maker Whirlpool Corp. and toy maker Hasbro Inc. are among those reporting results during the week. Airlines, drug companies and more big banks are also scheduled to release their earnings.
The market is so focused on companies’ third-quarter results and their outlooks for the coming months that economic data such as the September home resales report that is expected this week isn’t likely to move the market much.
“Right now earnings are critical,” said Channing Smith, a vice president at Capital Advisors in Tulsa, Okla. “Earnings, revenues give us a better picture of what’s happening. If the economic data turns out well, it’s just the cherry on the sundae.”
Investors got a surge of optimism from results in the early part of last week and bought stocks enthusiastically, betting that the reports still to be released by hundreds of companies would also point to a recovering economy. The buying Wednesday sent the Dow Jones industrials over 10,000 for the first time in a year.
On Thursday and Friday, though, the news from Citigroup Inc. and Bank of America Corp. gave investors a reality check, as both banks reported billions of dollars in loan losses because consumers are struggling to pay their bills. They also reiterated warnings that the losses would continue.
General Electric Co. said Friday that its financial services business was weighed down by credit card and commercial real estate losses. Commercial real estate defaults are the latest wave of loans to start defaulting en masse.
That spate of bad news brought the market’s rally to a halt, and the Dow, down as much as 151 points Friday, closed with a loss that day of 67.
Despite that end-of-week slide, the Dow still rose 1.3% for the week, while the broader Standard & Poor’s 500 index gained 1.5%. The tech-dominated Nasdaq composite index rose 0.8%.
Although investors aren’t concentrating on economic data right now, they will be interested in what the Federal Reserve has to say about where the economy is currently and where it’s like to be in the near future.
Fed Chairman Ben S. Bernanke will speak today at the Federal Reserve Bank of San Francisco Asia Economic Policy Conference and Friday at a Fed conference in Boston on financial regulation and supervision after the credit crisis.
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At a glance
TODAY
National Assn. of Home Builders releases housing market index for October.
Quarterly earnings reports due from Apple, Gannett, Hasbro and Texas Instruments.
TUESDAY
Commerce Department releases housing starts data for September.
Labor Department releases the producer price index for September.
Quarterly earnings reports due from Yahoo, Caterpillar, Coca-Cola and UAL.
WEDNESDAY
Federal Reserve releases its “beige book” summary of regional economic conditions.
Quarterly earnings reports due from Amgen, EBay, Wells Fargo, AMR and Boeing.
THURSDAY
Labor Department releases weekly jobless claims data.
Federal Housing Finance Agency releases August home price index.
Freddie Mac releases weekly mortgage rates.
Conference Board releases leading indicators for September.
Quarterly earnings reports due from Netflix, Occidental Petroleum, Alaska Air Group, Amazon, Delta Air Lines, JetBlue Airways and McDonald’s.
FRIDAY
National Assn. of Realtors releases existing-home sales for August.
Quarterly earnings reports due from Microsoft, Schlumberger and Whirlpool.
