The coming week will pretty much wrap up this earnings season, but an important jobs number on Friday will also grab traders' attention.
Earnings aside, Randy Diamond, sales trader at Miller Tabak, says next week is "all about economic news, which will be pivotal to stocks and bonds." Notable reports include Tuesday's auto sales update. Investors continue to eye the economic reports for signs of when the
might change its measured rate-hike strategy.
Monday kicks off with reports from the likes of
Maxim Integrated Products
reports quarterly earnings on Monday as well. Analysts expect the generic-drug maker to earn 36 cents, up a penny from last year, on revenue of $1.28 billion.
Companies reporting Tuesday include
Among the big names stepping into the earnings spotlight on Wednesday are
is scheduled to report earnings on Wednesday as well. Analysts are looking for the company to earn 19 cents a share, same as last year, on sales of $11 billion.
Thursday is the heaviest day for earnings with reports from the likes of
( PIXR) and
Companies reporting results on Friday include
Economic Data Abound
"If the data show continues to show strength, it will result in further increases in expectations for a still-higher federal-funds rate or 4.25% or higher," says Diamond. "The 10-year Treasury note has been confined to a range of 4.0% to 4.5% for two years now, but could shift to 4.25% to 4.75% if the 4.25% fed-funds rate expectation becomes solidified." Higher interest rates, in turn, could put a lid on this summer's stock market rally.
Economic reports start off on Monday with construction spending and the ISM Index for June.
On Tuesday, auto and truck sales for July will be released, as well as personal income and spending data for the month of June. Jason Schenker, economist at Wachovia, is expecting a "massive" number for auto sales due to huge incentives from Detroit.
"The market will probably see the huge auto sales number as a sign of strong economic growth, but in actuality it's really just cannibalization of future sales," says Schenker.
Factory orders for June will also be released at 10 a.m. EDT. The consensus estimate is for no increase in factory orders compared with a rise of 2.9% in May.
The ISM Services number for July will be released on Wednesday. Economists expect it to dip to 61.5 from 62.2 the prior month. Wachovia's Schenker says the market will be watching the employment component for an indication of what to expect from the nonfarm payroll number that arrives two days later.
Friday will be the biggest day of the week in terms of economic reports, highlighted by nonfarm payroll numbers for July. Economists estimate that the country added 183,000 jobs for the month, up from 146,000 in June. The unemployment rate is expected to remain steady at 5%.
Paul Mendelsohn, strategist at Windham Financial, expects the payroll number -- which has been volatile this year -- to arrive in line with analyst estimates.
"The payroll number is going to stay erratic, that's just the way it's been during this expansion," says Mendelsohn. "Large companies are still announcing massive layoffs, but those people are being absorbed elsewhere."
Diamond also said investors should forget about August being a dull month in the market. According to the
Stock Traders Almanac
, he said, August was the best month of the year from 1901-1950 because of the U.S. economy's dependency on agriculture. But over the past 15 years, "August has become the worst S+P month, the second-worst DJIA month and the third-worst Nasdaq month," he said.
Mark it on your calendar.