Cancel the family vacation, postpone that business trip and prepare to hunker down in the office, because the coming week is one you won't want to miss.
Although the two peak weeks of corporate earnings are now over, another 91
companies are scheduled to release quarterly results next week, with six
components among them. More importantly, investors will face a raft of economic data, with everything from an advance reading on second-quarter gross domestic product to the employment report on tap.
"Trading conditions get fairly illiquid in this part of the year, and it doesn't take a whole lot to get the market to move in one direction or another," said Joe Liro, an equity analyst at Stone & McCarthy Research.
Liro said he has been impressed with the market's performance so far this month, noting that in 2002 and 2001, stocks moved lower in July. But he is concerned that the rally, which started in mid-March, has slowed down over the past few weeks despite a big jump Friday on the heels of some solid earnings and better-than-expected economic news. If next week's data prove to be a "mixed bag" as he expects, investors "might not be accepting of that."
He added, "My heart says we should head higher because the market hasn't repeated the 2001 and 2002 performance, but my head tells me we'll move lower because the market hasn't received the good earnings numbers and good economic data with the kind of response I had hoped."
Economic news next week will be "back-end loaded," meaning most of the data will come on Thursday and Friday. Analysts expect second-quarter GDP on Thursday to show a year-over-year increase of 1.9% after a 1.4% rise in the first quarter.
Also on Thursday, the second-quarter employment cost index is due for release. Economists are looking for an increase of 1% after a 1.3% climb in the first quarter. Meanwhile, initial unemployment claims and the Chicago purchasing manager's index are on the docket. In addition, the Organization of the Petroleum Exporting Countries is expected to hold an extraordinary meeting Thursday to discuss the possibility of cutting production.
On Friday, the employment report and Institute for Supply Management's manufacturing index are both expected to be released. The unemployment rate for July is projected to remain steady at 6.4%, with 13,000 new jobs added to the payroll. In June, the economy lost 30,000 jobs. The ISM's manufacturing index is forecast to rise to 51.5 in July from 49.8 in the previous month.
Data on construction spending and the University of Michigan's consumer sentiment report also round out the week's economic data. Earlier in the week, the Conference Board's consumer confidence report and the
beige book, which examines economic activity in various regions across the country, could have some impact on trade.
"The market has been discounting that the economy is going to rebound," said Peter Cardillo, chief market strategist at Global Partners Securities. "In order for us to be able to sustain these levels, we need to see the economic numbers support that. If not, the market could certainly correct."
Regardless of what the numbers say, however, Cardillo still expects the market to go sideways for the balance of the summer. "I think we'll be in a trading range of up or down 5%, which would actually be healthy for the market," he said.
Among earnings, Dow component
will report second-quarter results Monday. Fellow Dow members
will report on Tuesday, followed by
Procter & Gamble
Other companies reporting include
Blended S&P 500 earnings, which include results from the companies that have reported and estimates for the rest, show profits up 8.1% from last year, according to Thomson First call. That's well above analysts' 5.3% estimate at the start of July. Some 66% of companies have beaten expectations, while 22% have matched and 12% have missed their numbers. While most companies typically beat the estimates, firms surpassed analysts' numbers by a record 6.2% in the second quarter.
Dow Jones Industrial Average
ended this week up 96 points, or 1%, from last Friday, while the Nasdaq gained 22 points, or 1.3%, and the S&P added 6 points, or 0.5%.