Wall Street’s main focus will be on Fed, not corporate earnings

Not even earnings reports from big names such as Google Inc. and General Electric Co. this week will be able to pull Wall Street’s focus away from the possibility of more cheap cash flowing in from the Federal Reserve.

Normally when the likes of JPMorgan Chase & Co. or Intel Corp. — which are also reporting this week — tell investors how much they earned in the previous quarter, the stock market hangs on every word.

But after Friday’s surprisingly anemic payrolls report, the increased likelihood the Fed will buy more assets like Treasury bonds to stimulate the economy has investors ignoring the usual benchmarks.

“Markets have been oscillating between macro- and microdata, and the upcoming week will focus on macro,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wis.

The fact that Wall Street closed Friday in the black despite the weak payrolls data is evidence the Fed’s action is foremost in the minds of investors at this time.

Action from the central bank has already been baked into the equities rally, with $500 billion as the most talked-about injection.

Economic data due out this week — including consumer and producer prices, retail sales and consumer sentiment — could shed further light on whether the economy has slowed enough to require swift action from the Fed.

Intel warned in late August that its revenue could fall short, and its shares got punished, so there’s little space for a negative surprise.

This week’s Treasury auctions, especially of longer-term bonds, may also provide a boost to stocks.

Investors are getting fatigued and bids on the 30-year bond might be a little weaker from past auctions, Jacobsen said.

A decline in interest would suggest “people are more interested in going into equities rather than bonds,” he said.

Turning the balance even further in favor of the bulls, expectations of more easing from the U.S. central bank should keep the dollar on a downtrend, which is another signal of gains for Wall Street.