The Coming Week: Working the Puzzle

Investors will finally get time to make sense of the last month's earnings onslaught.
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The week ahead will be a chance for the markets to digest and reflect upon the deluge of earnings and economic news that has filled the last few weeks.

Retail earnings reports, which should include key forward guidance, and more economic data will rule the back half of the week. The early part should be uneventful, in part because of the Veteran's Day holiday Tuesday, when the bond market is closed. Investors might also note that any news that does emerge might not catalyze much buying or selling, in light of the muted reaction conferred on Friday's strong jobs report and the recent GDP numbers.

Friday's employment report, which showed that 126,000 jobs were added in October, may be the last knock-your-socks-off economic news for a while. Analysts see little to get excited about in the economic news scheduled for next week.

"Both markets are looking for vindication of what we have already seen so far for economic news performance," said Enrique Figueroa, chief investment officer at Sand Hill Advisors. "People forget that by the time the numbers look good, the market has already moved."

The bond market holiday will keep the early part of the week quiet, said Charles Rotbult, director of financial content at INVESTools. "But we do have lots of retail earnings. Depending on what they say about the fourth quarter, that could have some pull on the markets." Analysts and investors will be curious to hear what the upcoming holiday season has in store, he added.

Wal-Mart's

(WMT) - Get Report

earnings report will be released Thursday before the market opens, and investors look to that as a leading indicator for the retail sector and the economy in general. Analysts expect Wal-Mart to earn 47 cents a share, up from 41 cents a share a year ago.

One day after Wal-Mart's earnings are the government's retail sales figures, which will be released Friday at 8:30 a.m. EST. Rotbult believes, however, that because October same-store sales were already released, the retail sales numbers won't have much of an influence on the market. Analysts expect a rise of 0.1%, compared to a decline of 0.2% in September.

Mat Johnson, an economist at Quantit Economic Group, believes the retail sales figure that excludes autos will be an interesting number. "That will be the key one, to see how consumer spending fared in October after falling in September," he said. Analysts expect a rise of 0.3% in the ex-autos number.

Johnson is also interested in Thursday's initial jobless claims, saying a reading below 350,000 would be a huge positive for the economic recovery.

Meanwhile, industrial production and capacity utilization come out on Friday, and Rotbult believes the results might have pull on the market only if there's a surprise in the numbers. "Given the reports," he said, "I'd be shocked if there was a surprise to the upside."

Analysts expect industrial production to increase 0.4% from September's 0.4% rise. Capacity utilization is seen at 74.9% from last month's reading of 74.7%.

Another key number could be the producer price index, which will be released on Friday at 8:30 a.m. EST. "We're in a very unique cycle of strong economic growth with no inflation," Figueroa said. As a result, he believes that people will be looking to see if there are any signs of inflation in the PPI number. Economists are calling for a rise of 0.2%, down from last month's increase of 0.3%.

Still, said Figueroa, "If we continue to get good

economic news, the stock market will remain flattish as it quietly digests the information." The bond market, however, will move if the PPI points toward inflation, he said.

Other economic news released will be import/export prices coupled with international trade, both on Thursday at 8:30 a.m. EST. On Friday, the University of Michigan's preliminary consumer sentiment reading will be released at 9:45 a.m. EST.

As earnings have wound down for the most part, Paul Nolte, director of investments at Hinsdale Associates, believes the market might focus next week on analyst research and "exogenous news," referring in part to New York Attorney General Eliot Spitzer's probe of the mutual fund market. In all, he believes it will be a "funky week," with low volume on Monday in anticipation of the holiday.

Also, Nolte said, "Technology will be a continued focus as investors digest

previous earnings news from

Intel

(INTC) - Get Report

and

Microsoft

(MSFT) - Get Report

."

Other key retailers reporting next week are

May Department Stores

(MAY)

,

J.C. Penney

(JCP) - Get Report

and

TJX Cos.

(TJX) - Get Report

on Tuesday. On Wednesday,

Federated

(FD)

reports, while Thursday's reports include Wal-Mart,

Target

(TGT) - Get Report

and

Kohl's

(KSS) - Get Report

.

In the technology sector, look for

Dell

(DELL) - Get Report

on Thursday and

Applied Materials

(AMAT) - Get Report

on Wednesday.

ImClone Systems

(IMCL)

will report on Friday.