Wall Street Faces a Make-or-Break Week Ahead
As the annual holiday shopping frenzy looms, investors confront a busy and perhaps fateful start to November. Crucial economic and quarterly earnings reports on the docket will provide clues as to the performance of the economy for the rest of 2015. Investors will be poring over these numbers, in an attempt to gauge the health of the economy before the Federal Reserve's next meeting in December.
And as the earnings seasons winds down, this week will feature the operational results for several sector-moving bellwether firms.
To date, the quarterly earnings of 60% of the S&P 500 index components have been released. The gross earnings of these companies have declined by a year-over-year average of 1.7%, a marked improvement from Wall Street's consensus estimate on Oct. 1 that earnings would contract by 4.2%.
The markets head into this week amid weaker but still steady economic data that confirm the economic recovery's traction. The U.S. Commerce Department on Friday reported that Americans hiked their spending by only 0.1%, the weakest performance since consumers curtailed spending in January. Income growth barely budged, with an increase of only 0.1%, the paltriest gain in four months.
Moreover, U.S. gross domestic product growth slowed in the July-September quarter to an annual rate of 1.5%, compared with the 3.9% rate of the April-June period.
Still, economic growth is healthy enough to warrant investor optimism (albeit muted). Most economists predict steady if unspectacular growth in the fourth quarter and point to tailwinds in coming weeks such as still-strong consumer sentiment as the holiday season gets underway. Holiday gift buying in November and December accounts for 70% of U.S. consumer spending, which in turn accounts for about three-fourths of the country's GDP.
All of which makes this week's earnings reports and official data releases of keen interest, especially as the Federal Reserve weighs progress on its employment and inflation goals to determine whether to raise rates at its meeting next month.
Here are the highlights of what you should watch this week:
Earnings Reports
Monday, Nov. 2
Lowes
Tenet Healthcare
Visa
Tuesday, Nov. 3
Activision Blizzard
Harris
Kellogg
Martin Marietta
Tesla Motors
U.S. Steel
Wednesday, Nov. 4
Allergan
Becton, Dickinson and Co.
Marathon Oil
Sunoco
Thursday, Nov. 5
Enbridge
Holly Frontier
Kraft Heinz
SeaWorld Entertainment
Walt Disney Co.
Friday, Nov. 6
Berkshire Hathaway
Humana
Economic Reports
Monday, Nov. 2
PMI Manufacturing Index
ISM Manufacturing Index
Construction Spending
Tuesday, Nov. 3
Motor Vehicle Sales
Factory Orders
Wednesday, Nov. 4
ADP Employment Report
Gallup U.S. Job Creation Index
PMI Services Index
Thursday, Nov. 5
Gallup U.S. Consumer Spending Measure
Jobless Claims
Friday, Nov. 6
Employment Situation
For a list of weak and vulnerable stocks that would get clobbered by disappointing data releases this week, click here.
John Persinos is editorial manager and investment analyst at Investing Daily. At the time of publication, the author held no positions in the stocks mentioned.