The fate of the market's momentum rests with the coming week's retail earnings reports, which, along with another big dose of economic data, will rule the headlines, say analysts.
"This is the week of the retailers because a lot of old-line and old family names are coming in with numbers," said Daniel Morgan, an analyst at Noble Financial Group. Morgan expects that the reports should be generally positive in light of the fact that earnings growth overall in the first quarter has been 24% on top of a 12% rise in total sales.
The top retail reports to watch, according to Morgan, will be
, both on Thursday.
"Even though J.C. Penney isn't
, it is an old-line retailer that at one time might have been en vogue," said Morgan. He said that the market always wants news on Penney's troubled
drugstore division, which competitors
and most recently
are in a bidding war to acquire.
Other key retail reports next week include:
on Monday; rival
on Wednesday; and
In addition to the slew of economic reports,
Chairman Alan Greenspan will be speaking on Monday and Friday. On Monday, he will speak at 9:15 a.m. EST at the Credit Union National Association Government Affairs Office in Washington. On Friday, he'll address an economic policy research summit in Stanford, Calif.
Peter Cardillo, chief market analyst at S.W. Bach & Co., thinks the markets will be watching and reacting to Greenspan's speeches. He also thinks the most important economic data will come on Friday with the Chicago Purchasing Managers' Index, which "will give us insight as to what the national
Institute for Supply Management's Purchasing Manager's Index report looks like. There's a lot on the table," he said. The ISM's index will be released the week of March 1.
Analysts expect a reading of 63.5 for the Chicago PMI, compared with January's reading of 65.9.
Other market-moving economic reports will be Tuesday's consumer confidence reading for February and Thursday's durable goods report for January, said Cardillo. Economists expect a reading of 93 for consumer confidence, compared with the reading of 96.8 in January. For durable goods, the expectation is for a rise of 1.4%, compared with December's increase of 0.3%.
"I suspect what we're going to see is a market that is just going to digest these numbers," said Cardillo. "The market seems to be stabilizing. Once the consolidation phase is out of the way, which seems to be constantly trading at the high end of range, then I think we'll see an attempt to make new highs."
Morgan will be looking forward to the preliminary reading of fourth-quarter gross domestic product on Thursday, as well as Friday's reading of February consumer sentiment. Economists foresee the GDP rising 3.8%, a bit less than the advance reading of 4%. For Friday's report on consumer sentiment from the University of Michigan, the consensus is for a reading of 93.8, compared with the preliminary reading of 93.1.
Morgan also noted that the producer price index numbers, which were delayed last week because of a technical difficulty, could also be released.
Jim Awad, president and market analyst at Awad Asset Management, said much can be divined from the markets' reaction to the news. "I'll be watching closely to see if the market views whatever happens as the glass being half full or the glass being half empty," he said.
Awad added that he will be trying to figure out whether the market has discounted all the good news or whether it has room for further upward movement. Will the market reassert itself or go into correction mode?
"We know the economy is improving, corporations are into good shape, profits are growing nicely and the market is up," said Awad. But, "the earnings comparisons toward the back half of the year are going to get more difficult, and we know that the next interest rate change is going to be up."
Other market-moving earnings reports should be
on Tuesday, and
on Thursday, Morgan said.
Other economic news next week has existing-home sales for January on Wednesday with analysts forecasting an annualized rate of 6.45 million, down from 6.47 million in December.
Look for new-home sales for January on Thursday; economists have predicted a rate of 1.095 million, compared with 1.06 million in the prior month. And Thursday's report from the government on initial jobless claims has analysts currently expecting 347,000 claims, compared with the prior week's 344,000.
Lastly, the Help Wanted Index will be released on Thursday, with analysts expecting a reading of 39, from a reading of 38 in December.