Traders are bracing themselves for another earnings onslaught in the coming week. And the profit expectations, along with prospects about first-quarter economic growth, are high.
"Earnings will continue to come in better than predicted because first-quarter growth was very strong -- and we are going to see that from the GDP report next Friday," says Ken Tower, chief market strategist at CyberTrader. "So it's going to be dangerous for companies who disappoint."
Monday kicks off the next big earnings week with reports from the likes of
will be able to tune in to the company's earnings on Monday. Analysts polled by Thomson First Call expect the movie distributor to earn 6 cents a share, reversing a loss of 9 cents a share last year, on revenue of $221 million.
On Tuesday, look for earnings from
Also on tap for Tuesday are
will be reporting first-quarter numbers Tuesday as well. Analysts expect the maker of liquid crystal display glass to report a profit of 23 cents a share for the quarter, up from 17 cents last year, on $1.2 billion in revenue.
The earnings party continues on Wednesday with big-hitters
Thursday may be the biggest day of the week, with more than 500 companies releasing quarterly reports. Among those are
XM Satellite Radio
will release results for its fiscal third quarter on Thursday. The Street predicts that Mister Softee's earnings rose to 33 cents a share from 28 cents last year, on $11 billion in revenue.
Traders will get a slight break on Friday, but there will still be a few big names worth watching, including
Earnings will dominate the headlines, but economic data won't be completely overshadowed in the coming week, especially with a big GDP number on the horizon.
April consumer confidence data will be released on Tuesday, giving insight into concerns about consumer habits amid rising interest rates and soaring oil. According to First Call, economists are expecting the index to drop to 106 from 107.2 in March.
"This is a volatile report, yet it garners attention because it provides insight as to how the consumer feels, which is all-important right now," says Robert Pavlik, chief investment strategist at Oaktree Asset Management. "A low reading due to higher oil prices may negatively impact retailers."
March existing-home sales data also will be released on Tuesday. The home-selling rate is expected to drop to 6.7 million annualized units from 6.91 million in February.
Real-estate watchers will turn their eyes Wednesday to March new-home sales, which are expected to rise to a rate of 1.106 million annualized units from 1.08 million the previous month. The market also will absorb the
Beige Book and durable goods data for March.
Friday will be an important day for economic data, with the advance first-quarter GDP figure in the spotlight. The consensus estimate is for growth of 5%, up from 1.7% in the fourth quarter of 2005.
"There is no denying that most of Wall Street expects a rebound in GDP growth in the first quarter after the slow fourth quarter, which was impacted by the hurricanes," says Pavlik. "Whatever the number, you can expect the president to make some mention of it sometime throughout the day."
In addition to the GDP figure, two key inflation indicators will be released: the GDP deflator, which measures the change in prices in total GDP, and the employment cost index. The first-quarter chain deflator is expected to rise 2.7%, down from 3.5% the prior period. Economists anticipate that the employment cost index will rise 0.9% from 0.8% in the fourth quarter.
"At this moment the Fed would like to stop raising rates," says CyberTrader's Tower. "But if the employment cost index shows too much wage inflation, then the inflation hawks will make it hard for them to stop."
The Chicago PMI for April rounds out Friday's data deluge. The Midwestern manufacturing gauge is expected to drop to 58.3 from 60.4.