After investors enjoy a long weekend courtesy of the Memorial Day holiday, they will be greeted upon their return by a flood of economic data, with most reports expected to be negative.
In recent weeks, the decline in economic data has slowed, but data continue to be weak with very little sign of improvement, leading many traders to wonder when a marked improvement will come. Despite this, market analysts say next week could end with gains, if history is any indication.
Ryan Detrick, senior technical strategist with Schaeffer's Investment Research, says that while the market is trapped technically between 875 and 940 on the
, the Memorial Day week could give bulls something to cheer.
"We did a study and found that going back the past 10 years, Memorial Day week is actually very bullish," Detrick said. "The past 10 years the S&P 500 has averaged 1.33% and is higher seven out of 10 times, including the past three."
While 1.33% may not seem all that significant, Detrick said that over the last 10 years, the average weekly return has been slightly negative at 0.04%, and just over half of those 522 weeks have been positive.
Still, there may not be a lot of room to run, according to the technicals. While 875 will serve as support on the S&P 500 for the recent breakout, Detrick said that the 940 high "will be tough to break out of."
Earnings and Economic Data
Several economic reports will be in focus over the four trading sessions next week, with a wide range of data that will give traders a glimpse into the health of the housing and job markets, as well as how the consumer is holding up.
"It is only a four day week, but we could have a very news-driven market next week," Detrick said. "Things pick up in terms of economic data."
After the Memorial Day holiday, traders will return Tuesday to the March read of the S&P/Case-Shiller home price index, which is expected to show an 18.4% decline after an 18.6% drop in February. Later Tuesday, the consumer confidence index will be posted, with economists expecting a reading of 42 in May after a 39.2 reading last month.
The lone report due Wednesday is the April read on existing-home sales. Economists expect the number to improve to 4.65 million annualized units from 4.57 million in March.
The action picks up Thursday, with the April durable goods orders and new home sales, as well as the weekly report on initial jobless claims and crude inventories. Durable goods orders are expected to increase 0.5% after a 0.8% drop in March, while new home sales are expected to rise to 363,000 from 356,000 in March.
Perhaps the most important report will come Friday, when the preliminary read on first-quarter gross domestic product will be released. The number should be revised to a 5.5% decline from the previously reported 6.1% fall.
Later in Friday's session, the Chicago purchasing managers' manufacturing index for May and the University of Michigan's revised consumer sentiment index will be released.
Turning to quarterly earnings reports,
will be the headliner in the coming week, but otherwise it will be relatively quiet on the earnings front.
The schedule is empty Monday because of the holiday, and video game maker
is one of only a couple of companies to report on Tuesday.
Much like the previous week, retail earnings will also be in focus. Before the start of trading Wednesday,
all will report quarterly results.
will release its quarterly results after Wednesday's close.
Dell will report after the end of trading Thursday, along with
, but before that,
will post results ahead of Thursday's opening bell.
The week ends as quietly as it began, with
the only two companies scheduled to report results.
Several companies will also be hosting their annual shareholder meetings during the coming week.
are among those companies scheduled.