Skip to main content

After focusing squarely on economic news and monetary policy in recent weeks, investors will shift their attention to corporate earnings in the week ahead.

The fourth-quarter earnings season kicks off next week with some major players reporting results. Early signs suggest the current quarter will be a good one for corporate America. The ratio of negative to positive earnings preannouncements has stabilized at 1.3, according to Thomson First Call. That compares with 1.7 at the same time last quarter and last year.

"We're basically seeing a higher number of positive preannouncements than we've seen in past quarters," said Ken Perkins, a research analyst at Thomson First Call. Fourth-quarter earnings are expected to rise 22.1%.

On Monday,


(LEN) - Get Lennar Corporation Class A Report

is scheduled to post results and analysts are looking for a profit of $3.06 a share. Housing stocks were crushed this week after the

Federal Reserve

suggested that deflation is no longer a concern, but some analysts have said the selloff has been unwarranted because housing activity remains solid.

Software giant


(ORCL) - Get Oracle Corporation Report

also is expected to report results Monday, and analysts are calling for a profit of 11 cents a share. Some say the firm is more likely to beat expectations than miss them, partly because of the weaker dollar.

Among other firms reporting are

Pier 1 Imports

(PIR) - Get n.a. Report

TheStreet Recommends

on Tuesday and




Bear Stearns



Lehman Brothers



Best Buy

(BBY) - Get Best Buy Co., Inc. Report


Circuit City

(CC) - Get Chemours Co. Report

on Wednesday.

Goldman Sachs

(GS) - Get Goldman Sachs Group, Inc. Report


Morgan Stanley


will chime in on Thursday, followed by

KB Home

(KBH) - Get KB Home Report

on Friday. A stronger stock market in the quarter led to more merger and acquisition activity, which could help brokers to post better results.

Sean Martin, head trader at A. Gary Shilling & Co., is expecting the market to trade sideways next week, noting that volume will fall off as the holidays draw closer.

"If I had to bet I'd say

the market will be slightly higher from where it is now," he said. "But I don't see anything that could move the markets one way or another."

Peter Cardillo, chief market strategist at Global Partners Securities, said options on stocks, stock indices, futures and individual stock futures all expire next Friday. This "quadruple witching" could lead to some volatility as the end of the week approaches.

"One of the reasons we've had a bumpy road trying to get to 10,000 is that we've had some

early unwinding of options," he said.



moved above 10,000 this week for the first time in 18 months, and analysts believe the move is sustainable, despite some possible tax-loss selling at year-end. Investors often sell stocks that have done poorly at the end of the year in order to offset any capital gains they may have accrued.

While earnings will be the market's main focus next week, a number of economic reports are due out, including the New York Empire State survey on Monday. The consumer price index, housing starts, industrial production and capacity utilization and current account balance are expected Tuesday. Thursday will bring initial unemployment claims, the leading economic indicators, the Philadelphia Fed survey and the Treasury budget.

Economists are expecting both the headline CPI and the core rate to climb 0.1%. Housing starts for last month are slated to come in at a 1.915 million pace, down from a near 18-year high of 1.96 million in October. November's industrial production is expected to climb 0.5% from 0.2% in the prior month.

Capacity utilization, which measures how much of the country's production capacity is actually being used, is projected to rise to 75.3% compared with 75% in October. Analysts have said the low capacity utilization rate has prevented companies from spending money on new plants and equipment, so a nudge up in this rate is considered a good sign.

The Conference Board's leading indicators, which signal how the economy will perform six months out, are seen rising 0.3%, down from 0.4% in October. "I still think the economic news is good," said Cardillo. "From a technical standpoint, this market is ready to move above 10,000."