Coming Week: Job Shadow
Gregg Greenberg
05/27/06 - 10:03 AM EDT
The coming week will begin a day late, but the dollars won't be in short supply with a big payroll number on tap.
"Usually, the market unlimbers after a long weekend," says Larry Wachtel, senior market analyst at Wachovia. "But traders should be back in the swing of things by Friday's important May jobs number."
But traders will have other economic data to sift through before Friday's major report. On Tuesday, May consumer confidence numbers will be the first dose of data traders receive after the Memorial Day holiday. According to Thomson First Call, economists expect a reading of 101, down from 109.2 in April.
On Wednesday, the Chicago PMI for May will be released. Economists anticipate a reading of 56.3, down from April's 57.2.
Also arriving Wednesday and sure to garner attention are the
FOMC minutes from the May 10 meeting. Traders will be looking for more clues about the Fed's rate plans for its next get-together.
"Any hint from the Fed on a day-to-day basis is market-moving nowadays," says Wachtel. "It's super-intense like I've never seen before."
Adds James Park, managing director at Rodman & Renshaw, "The Fed has been experiencing some communication gaps lately, so any clear and direct information from them will be welcomed."
Auto sales for the month of May will be released Thursday. Analysts are looking for overall industry tallies to equal the prior month, with cars at 5.6 million units and trucks at 7.2 million.
According to Wachovia economist Jason Schenker, analysts won't be looking at the total number of vehicles sold as much as the car vs. truck breakdown.
"Less fuel-efficient SUVs and light trucks have been in the majority since 2001, so it will be interesting to see if smaller cars make a comeback," says Schenker. "If they do, then it will show if high gas prices are really changing consumers' purchasing behavior or if it's just window dressing."
Also hitting the tape on Thursday are construction spending for April and the May ISM index, which economists expect to dip to 56 from 57.3 the prior month.
The nonfarm payroll report, the big market mover, arrives on Friday. Economists are expecting 175,000 jobs to have been added in May, up from April's surprisingly weak 138,000. The average hourly workweek is anticipated to remain at 33.9 hours, and the unemployment rate is expected to remain stuck at 4.7%.
Wachovia's Schenker is expecting the number to come in a little under consensus at 161,000, which he calls "not a blockbuster, but a fairly solid figure for midcycle economic growth."
Not as much of a headline grabber, but still important, April factory orders will also be released on Friday. Economists anticipate a 0.6% drop after growth of 4.2% in March.
Earnings Taper Off
U.S. markets will be closed Monday for the Memorial Day holiday, so no U.S.-based companies are scheduled to report results. Canadian markets will be open for business, however, so our neighbors north of the border can tune in when
Bank of Nova Scotia(BNS Quote) reports results.
When traders return from their long weekends on Tuesday, they will hear quarterly results from the likes of
Albertson's(ABS Quote),
Semtech(SMTC Quote) and
Vodafone(VOD Quote).
Also reporting on Tuesday will be
CA(CA Quote). Analysts expect the company formerly known as Computer Associates to post a fiscal fourth-quarter profit of 22 cents a share, up from 3 cents last year, on revenue of $975 million.
On Wednesday the earnings lineup includes retailers
Dress Barn(DBRN Quote),
Costco(COST Quote),
Bon-Ton(BONT Quote) and
Tiffany(TIF Quote).
Hovnanian Enterprises(HOV Quote) is slated to release fiscal-second quarter earnings on Wednesday. The homebuilder cut its earnings projection earlier this month to a range of $1.40 to $1.50 a share, blaming slower sales and increased cancellations. Analysts anticipate the company will post a profit of $1.43 a share, down from $1.62 last year, on revenue of $1.35 billion.
More retail earnings are on tap for Thursday, with reports from companies such as
Dollar General(DG Quote) and
Pathmark Stores(PTMK Quote).
Other companies scheduled to report Thursday include
Heinz(HNZ Quote),
Movado(MOV Quote) and
Wind River Systems(WIND Quote).
Ciena (CIEN Quote) also will be in focus Thursday. According to First Call, analysts predict the optical-networking company will report a loss of a penny a share for its second quarter, narrowed from a loss of 5 cents a share last year.
