Coming Week: Never-Ending Earnings
Joanna Ossinger
07/19/08 - 09:56 AM EDT
If there are some more
Wells Fargos(WFC Quote - Cramer on WFC - Stock Picks) in the mix next week, investors could be very happy.
Last week, Wells Fargo, along with falling oil prices, helped buoy a market that had gotten to incredibly low levels by releasing a
better-than-expected earnings report.
Over the five trading sessions, the
Dow Jones Industrial Average jumped 4.5% to 11,496.57, the
S&P 500 gained 1.7% to 1260.68, and the
Nasdaq Composite added 2% to 2282.78.
"We think the bounce can continue," says Ryan Detrick, chief technical strategist at
Schaeffer's Investment Research. "This could be the first quarter in four that we beat overall expectations."
Detrick notes out that the 1220 to 1225 range was a double bottom for the S&P 500 in the summer of 2006, and "it sparked a tremendous rally" in the last half of that year, so an echo of that is possible here.
The earnings come fast and furious next week across all major sectors, led by a raft of Dow components. Those include
Bank of America(BAC Quote - Cramer on BAC - Stock Picks) and
Merck(MRK Quote - Cramer on MRK - Stock Picks) on Monday,
Caterpillar(CAT Quote - Cramer on CAT - Stock Picks) and
DuPont(DD Quote - Cramer on DD - Stock Picks) on Tuesday,
AT&T(T Quote - Cramer on T - Stock Picks),
Boeing(BA Quote - Cramer on BA - Stock Picks),
McDonald's(MCD Quote - Cramer on MCD - Stock Picks) and
Pfizer(PFE Quote - Cramer on PFE - Stock Picks) on Wednesday and
3M(MMM Quote - Cramer on MMM - Stock Picks) on Thursday.
Investors will be watching to see if the financial-sector-inspired momentum can continue, but the markets will have to get past earnings releases from a number of companies that have been the subject of concern lately. For example, on Tuesday, reporters
Wachovia(WB Quote - Cramer on WB - Stock Picks) and
Washington Mutual(WM Quote - Cramer on WM - Stock Picks) are expected to show some ugliness on their balance sheets.
Other financial companies reporting earnings include
UnionBanCal(UB Quote - Cramer on UB - Stock Picks) on Monday;
KeyCorp(KEY Quote - Cramer on KEY - Stock Picks),
Regions Financial(RF Quote - Cramer on RF - Stock Picks) and
SunTrust(STI Quote - Cramer on STI - Stock Picks) on Tuesday;
SLM Corp.(SLM Quote - Cramer on SLM - Stock Picks) Wednesday;
MBIA(MBI Quote - Cramer on MBI - Stock Picks),
Genworth Financial(GNW Quote - Cramer on GNW - Stock Picks) and
Sovereign Banc(SOV Quote - Cramer on SOV - Stock Picks) on Thursday; and
T. Rowe Price(TROW Quote - Cramer on TROW - Stock Picks) on Friday.
"There's been a lot of concern" in the sector, "and some of it's been alleviated by Wells Fargo and
JPMorgan(JPM Quote - Cramer on JPM - Stock Picks), and maybe
Citigroup(C Quote - Cramer on C - Stock Picks)," says Robert Pavlik, chief investment officer at
Oaktree Asset Management. "But those are big money-center banks, and you'll have to see how some of the smaller players in that industry are doing."
"I think there will be a differentiation between financial companies that managed their subprime exposure well and those that didn't," adds Scott Wren, senior equity strategist at
Wachovia Securities.
The tech sector also has a big week, particularly with some high-profile recent misses (think
Google(GOOG Quote - Cramer on GOOG - Stock Picks) and
Microsoft(MSFT Quote - Cramer on MSFT - Stock Picks)).
Apple(AAPL Quote - Cramer on AAPL - Stock Picks) and
Texas Instruments(TXN Quote - Cramer on TXN - Stock Picks) come out on Monday;
Broadcom(BRCM Quote - Cramer on BRCM - Stock Picks),
STMicroelectronics(STM Quote - Cramer on STM - Stock Picks) and
Yahoo!(YHOO Quote - Cramer on YHOO - Stock Picks) report on Tuesday; and
Qualcomm(QCOM Quote - Cramer on QCOM - Stock Picks) makes its announcement on Wednesday.
"There were high expectations relative to other sectors" for technology, Detrick says. Tech-company earnings "better be impressive" for the stocks do well, he predicts.
Biotech and Big Pharma also make an appearance, as
Schering-Plough(SGP Quote - Cramer on SGP - Stock Picks) reports on Monday, and
Bristol-Myers(BMY Quote - Cramer on BMY - Stock Picks),
Elan(ELN Quote - Cramer on ELN - Stock Picks) and
Eli Lilly(LLY Quote - Cramer on LLY - Stock Picks) come out on Thursday.
The energy and commodities space, one of the brightest areas these days, will see some action. Reports come from
Halliburton(HAL Quote - Cramer on HAL - Stock Picks) on Tuesday,
ConocoPhillips(COP Quote - Cramer on COP - Stock Picks) and
Freeport-McMoRan(FCX Quote - Cramer on FCX - Stock Picks) on Wednesday, and
Newmont Mining(NEM Quote - Cramer on NEM - Stock Picks) Thursday.
"The profits in the energy sector will be good, but I think the market's starting to anticipate that the global economy is going to slow, which could stifle demand," Wren says.
A group that suffers from the high energy prices will clock in as well -- the airlines.
US Airways(LCC Quote - Cramer on LCC - Stock Picks),
UAL Corp.(UAUA Quote - Cramer on UAUA - Stock Picks) and
JetBlue(JBLU Quote - Cramer on JBLU - Stock Picks) report on Tuesday,
Northwest(NWA Quote - Cramer on NWA - Stock Picks) announces on Wednesday, and
Southwest(LUV Quote - Cramer on LUV - Stock Picks) reports on Thursday.
Rounding out the long list of major earnings releases is
UPS(UPS Quote - Cramer on UPS - Stock Picks) on Tuesday,
PepsiCo(PEP Quote - Cramer on PEP - Stock Picks) Wednesday and
Ford Motor(F Quote - Cramer on F - Stock Picks) on Thursday.
Of course, oil-related companies aren't all that will affect the markets next week. Crude itself will be watched to see whether it could slide any further, after falling nearly $20 below its all-time high amid rising inventories, greater supply from Nigeria and the prospect of weekend talks between the U.S. and Iran.
"In the big picture, we're still in a long-term uptrend," says Tom Bentz, director and senior energy analyst at BNP Paribas Commodity Futures. "You're starting to see more crude show up, and with the combination of more crude and less demand, we're starting to see inventories build."
He adds that from a technical standpoint, support is around $127, and "pretty significant support" in the $122 to $123 area. "I think it's going to hold."
The economic front is much quieter, though a few key releases will still catch some attention. Notably, the
Fed's beige book report comes out on Wednesday. It's the anecdotal compilation of economic conditions, and many market observers think it's one of the most relevant and accurate indicators about the economy because it in essence "takes the pulse" of the situation.
Also, the real estate sector will be in focus, with existing-home sales data coming out Thursday, and the new-home sales version on Friday. Isolated patches of encouraging data have come out of the sector, but the trend continues to head largely downward.
Consumer sentiment also gets a read, with revised Reuters/University of Michigan consumer sentiment data for July coming out on Friday.
"The outlook's improving, and I think the market's going to come around to realizing the world is not going to come to an end," says Wren. "We've played it pretty defensively for the last two years, but we felt like the middle of this year was probably going to be an inflection point for the market and the economy."
"We're getting less defensive and more cyclical now," he says.
Detrick agrees. "There's some real fear coming in, so on a longer-term basis, we think this is the time to start accumulating shares," he says. "We could have a potential for a nice end-of-year rally."
But many people are still cautious about the near-term outlook.
"I'm just watching and waiting," Pavlik says. "I probably have a little more cash -- and like many portfolio managers I've been talking to, I'm suspicious of the recent recovery. There are still a lot of concerns."
