Coming Week: Hot and Heavy

Market action in the coming week will continue to be driven by earnings news, as more than 800 companies are slated to report quarterly results. Even so, traders also will be busy keeping tabs on the situation in the Middle East.

"The possibility of this conflict spreading to other countries appeared to lessen last week," says Robert Pavlik, chief investment strategist at Oaktree Asset Management. "However, an Israeli invasion into southern Lebanon will likely refocus attention on the region, resulting in an increase to the terror risk premium in the price of crude oil."

The earnings onslaught begins on Monday with the likes of American Express ( AXP), Kraft ( KFT), Netflix ( NFLX) and Texas Instruments ( TXN).

Drugmakers Merck ( MRK) and Schering-Plough ( SGP) are also on tap to report second-quarter results Monday. Analysts polled by Thomson First Call expect Merck to post earnings of 65 cents a share, up from 62 cents a year ago, on $5.44 billion in revenue. Meanwhile, Schering-Plough is expected to earn 17 cents a share, up from 13 cents last year, on $2.64 billion in sales.

On Tuesday, the earnings lineup includes several big hitters, including Dow components Altria Group ( MO), 3-M ( MMM) and DuPont ( DD).

Fellow Dow member McDonald's ( MCD) also is slated to announce results. Mickey D's already said last week that it expects to post earnings of 67 cents a share, including a gain of 10 cents a share from the sale of Chipotle ( CMG) and extra expenses totaling 2 cents a share. Analysts project earnings of 57 cents a share on $5.42 billion in revenue.

On the tech side, look for earnings reports from Amazon.com ( AMZN)and Sun Microsystems ( SUNW) Tuesday.

Wednesday will feature reports from ConocoPhillips ( COP), Boeing ( BA), Symantec ( SYMC) and WellPoint ( WLP).

And auto-industry watchers will see if the second quarter was more kind to General Motors ( GM) than it was to Ford ( F), which posted gloomy results last week. Analysts, on average, predict that GM will report a profit of 52 cents a share, reversing a year-earlier loss of 56 cents a share.

Thursday will be the busiest day of the week on the earnings front, with close to 500 companies reporting. Among the big names are Bristol-Myers Squibb ( BMY), DaimlerChrysler ( DCX), Harrah's Entertainment ( HET) and Kellogg ( K).

Also on tap for Thursday are earnings announcements from L-3 Communications ( LLL), Boston Scientific ( BSX) and Comcast ( CMCSA)

The pace slows down Friday, but investors will still be able to chew on reports from Chevron ( CVX), Waste Management ( WMI) and Ingersoll-Rand ( IR).

"The theme of earnings season thus far has been that even good reports are being dismissed as old news," says Larry Wachtel, senior market analyst at Wachovia. "In the coming week, we could see more flights away from cyclical stocks to large-cap safe havens if guidance fails to inspire buyers."

Home Sweet Home Sales?

Second-quarter gross domestic product figures will headline the economic news for the coming week. Yet economists say that data on new and existing-home sales also will be closely watched.

"The all-important housing market has surely been decelerating, and next week's data will hopefully provide some clarity on the extent of the slowdown," says Phillip Neuhart, economist at Wachovia.

The National Association of Realtors will report June existing-home sales Tuesday morning. Economists anticipate home sales will come in at a seasonally adjusted annual rate of 6.6 million units, down from 6.67 million in May.

Consumer confidence data for July also arrives Tuesday morning. Economists surveyed by Thomson First Call are expecting a slight decrease in the index to 104.8 from 105.7 the prior month.

On Wednesday, the main economic news scheduled for release is the Fed's Beige Book.

June durable goods data will be announced Thursday. The forecast is for a 1.7% increase in orders, after a drop of 0.2% a month earlier.

Back on the home front, new-home sales data also hit the market on Thursday. Economists anticipate the number of new homes sold dropped to a rate of 1.175 million on an annual basis, down from 1.234 million in May.

Nevertheless, Wachovia's Neuhart says the result could be artificially high because "builders are increasingly reporting cancellations after the buyer signs the contract."

Finally, second-quarter GDP figures will be released on Friday, and the number is sure to bring with it more speculation of the Federal Reserve's next move. Economic growth is expected to slow to 3.1% after a 5.6% rise in the first quarter. Economists anticipate the chain deflator, a key figure watched closely by the Fed, to rise 3.7%, up from 3.1% growth last quarter.

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