Earnings Take Center Stage: Coming Week
Updated from 04/11/10Update includes Greece bailout details.NEW YORK (TheStreet) -- The coming week brings a flood of economic data and earnings reports as Dow component Alcoa (AA) - Get Report kicks off the quarterly earnings season late Monday.
That could come as a relief to investors who may have been frustrated to find the Dow Jones Industrial Average still closing lower than 11,000 despite briefly crossing the psychologically significant level ahead of Friday's closing bell.
Many market watchers believe the influx of data -- especially strong earnings reports -- will give stocks the kick they need to trade at levels not seen since the start of the financial crisis in the fall of 2008.
"There's a lot going on next week -- a lot on the economic data side and a lot of big earnings reports coming out at the same time -- so I think that will help put some of these macroeconomic issues like Greece and concerns about sovereign debt levels in the rearview mirror," said Benny Lorenzo, chairman and chief executive officer of Kaufman Brothers. "We think that will allow markets to keep climbing higher."
Investors could become more reassured about Greece's debt crisis after
eurozone nations announced details
Sunday about how they will help Athens.
Foreign ministers of the eurozone nations reportedly said they would provide Greece with $30 billion of loans this year at below-market interest rates.
The IMF is ready to provide an additional $10 billion of aid.
Kaufman Brothers' Lorenzo expects the Dow to maintain the 11,000 mark next week and believes markets will keep grinding higher even though several economists believe strong earnings have already been priced into the market.
"The earnings that are coming in have to be at least as good as the market is expecting," he said, adding that gains will be predicated on macroeconomic risks remaining in the background. "There are people out there who think the market is overextended and believe that we're due for a pullback of 10% to 15%, but our view is that the earnings are there and markets will continue grinding higher."
Year-over-year comparisons promise to be impressive because markets were scraping bottom around this time last year.
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Alcoa will unofficially kick off the first-quarter earnings season after Monday's closing bell.
Intel
(INTC) - Get Report
and rail transportation company
CSX
(CSX) - Get Report
report on Tuesday.
Wednesday brings more results from the transportation sector with earnings from trucking companies
Heartland Express
(SYMBOL)
,
J.B. Hunt Transport Services
(JBHT) - Get Report
and
Landstar System
(LSTR) - Get Report
.
JPMorgan Chase
(JPM) - Get Report
and
Yum! Brands
(YUM) - Get Report
also report midweek.
"I'll especially be looking at the rail and trucking companies to see whether they're shipping more, which is a sign that business is picking up," said Mike Shea, managing partner at Direct Access Partners.
Thursday's headliners include semiconductor company
Advanced Micro Devices
(AMD) - Get Report
and
(GOOG) - Get Report
, followed by
Bank of America
(BAC) - Get Report
and
General Electric
(GE) - Get Report
on Friday.
"It's an interesting week for earnings because you not only get a snapshot of some critical areas but then you get a little bit of confirmation behind it," said Mike Shea, managing partner at Direct Access Partners, pointing to earnings from both Intel and AMD, a spate of transport reports and results from both JPMorgan Chase and Bank of America.
"Will it tell us everything we need to know? Of course not, but it'll be interesting," Shea said.
On top of earnings comes a heavy dose of macroeconomic data starting with March export and import prices on Tuesday and March retail sales and the consumer price index on Wednesday. The
Federal Reserve
also releases its Beige Book on Wednesday, ahead of its next meeting at the end of April. Thursday is loaded with capacity utilization, industrial production and initial jobless claims releases, and a Friday brings March building permits and housing starts in addition to the University of Michigan's consumer sentiment report for April.
"Everybody is talking about whether or not this is a self-sustaining recovery. So I think everyone will be looking for more clues in the coming week and the focus will be on the consumer," said Mike Schenk, senior economist at the Credit Union National Association.
"As long as data keeps trending as it has been, it should help markets come to the realization that we are headed in the right direction," Schenk said.
-- Written by Melinda Peer in New York
.
