With a new year comes a look at the old. The fourth-quarter earnings season will kick off in the coming week with a number of high-profile companies reporting their performances over the last months of 2016.
Average earnings for the S&P 500 in the fourth quarter are expected to increase 4.4% from the same period a year earlier. Earnings growth would mark the second straight quarter of gains after the third quarter broke an earnings recession that lasted for four consecutive quarters. Earnings grew 4% in the third quarter of 2016.
"We believe investors are pricing in a beat for fourth-quarter earnings," said Lindsey Bell, investment strategist at S&P Capital IQ. "EPS growth hasn't fallen short of expectations since first quarter 2009 and the past two quarters had solid beat rates of 4.9% and 3.5%, respectively. As long as investors don't anticipate a greater-than-average beat, fourth-quarter earnings shouldn't rock the market.
Also on the earnings calendar, Acuity Brands (AYI - Get Report) , Apollo Education Group (APOL and Barracuda Networks (CUDA will report on Monday; Progress Software (PRGS - Get Report) on Tuesday; HB Fuller (FUL - Get Report) and KB Home (KBH - Get Report) on Wednesday; and Delta Air Lines (DAL - Get Report) and FuelCell (FCEL - Get Report) on Thursday.
Retail sales for December, the back-half of the critical holiday shopping season, will headline the economic calendar in the coming week. The measure is expected to grow 0.5% over December after a weak 0.1% reading in November thanks to growth in autos and gas prices.
"We see scope for a strong 0.4% rebound in the [headline number] in line with the surge in consumer spirits recorded in survey data and the positive holiday shopping reports," TD Securities analysts wrote in a note. "The latter in particular points to some lift from online spending (roughly 10% of sales)."
Elsewhere on the economic calendar, wholesale inventories and the Job Openings and Labor Turnover Survey for November will be released on Tuesday; import prices for December on Wednesday; and producer prices for December and a preliminary reading of the University of Michigan's consumer sentiment metric for January on Friday.