US stock investors will watch the earnings numbers flow in over the week ahead to see how much momentum the rally can get from early profit reports.
The first-quarter figures come as the three major US stock indexes finished a sixth straight week of gains, the best string since the rebound from 12-and-a-half-year lows in March last year, and the Dow briefly popped above 11,000 late on Friday.
Those gains could make it tough for stocks to rally further, even with expectations, according to Thomson Reuters, for Standard & Poor’s 500 companies’ first-quarter earnings to rise 36.8 percent from a year ago.
The earnings period strarts with results from Dow component Alcoa Inc after the bell on Monday.
Besides Alcoa, results are expected this week from top tech companies Intel and Google, as well as from General Electric and JPMorgan Chase & Co.
“The reaction to some of these earnings is going to be really important. If you don’t get the setback, and it trades higher, I think you’re going to squeeze another wave of buyers into the market,” said Nick Kalivas, vice president of financial research and senior equity index analyst at MF Global in Chicago.
While earnings are expected to be the focus, the upcoming week also brings the Consumer Price Index (CPI), last month’s retail sales, industrial production, housing starts and consumer sentiment reports, which will help investors gauge the speed of the economic recovery.
Other events likely to spark attention in the week ahead: US Federal Reserve Chairman Ben Bernanke testifies on the economic outlook before a congressional panel called the Joint Economic Committee, while investors will watch for signs of change in Greece’s debt crisis.
For the week, the Dow Jones industrial average rose 0.6 percent, the S&P 500 gained 1.4 percent and the NASDAQ increased 2.1 percent.
“The stock market has had a very significant rise off the [February] lows,” said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.
“I wouldn’t be surprised to see some near-term pullback within the context of a rising stock market,” he said.
Much stronger-than-expected earnings have helped propel the S&P 500 up more than 75 percent from March 9 last year’s closing lows. However, in the last earnings season, stocks actually lost about 3 percent as investors sold equities despite strong results.
Seventy-two percent of companies beat earnings estimates in the fourth quarter, down from a record 79 percent in the previous quarter, but still well above the 61 percent in a typical quarter, Thomson Reuters data showed.
Technical indicators point to overbought conditions heading into next week’s earnings, which could mean a pullback is in store, some analysts say.
“Short-term momentum for the Dow has been deteriorating since March 23 after reaching an overbought condition,” said Chris Burba, short-term market technician at Standard & Poor’s.
The Dow briefly rose just above 11,000 moments before Friday’s closing bell, but ended at 10,997.35, while the S&P 500 neared the 1,200 mark.
Both levels represent technical resistance, Burba said.
Bernanke is scheduled to speak on Wednesday to the Joint Economic Committee. Although data continues to show economic improvement, the Fed has reiterated its commitment to keep benchmark interest rates near zero.
Also on Wednesday’s agenda are the US CPI and the government’s data on retail sales, both for last month.
The overall CPI is pegged for a 0.1 percent rise last month from a flat reading in February, while core CPI, excluding volatile food and energy prices, is also seen up 0.1 percent, matching the previous month’s gain, according to economists polled by Reuters.
Retail sales are forecast to show a 1.2 percent rise for last month from the previous month, and minus autos, sales are expected to gain 0.5 percent from February, according to economists polled by Reuters.
Thursday’s industrial output is forecast to show a gain of 0.7 percent last month from the previous month.
Friday’s Thomson Reuters/University of Michigan Surveys of Consumers report is expected to show the preliminary index on consumer sentiment at 75 for this month. The index ended last month at 73.6.
NATIONAL SECURITY: The Chinese influencer shared multiple videos on social media in which she claimed Taiwan is a part of China and supported its annexation Freedom of speech does not allow comments by Chinese residents in Taiwan that compromise national security or social stability, the nation’s top officials said yesterday, after the National Immigration Agency (NIA) revoked the residency permit of a Chinese influencer who published videos advocating China annexing Taiwan by force. Taiwan welcomes all foreigners to settle here and make families so long as they “love the land and people of Taiwan,” Premier Cho Jung-tai (卓榮泰) told lawmakers during a plenary session at the Legislative Yuan in Taipei. The public power of the government must be asserted when necessary and the Ministry of
Proposed amendments would forbid the use of all personal electronic devices during school hours in high schools and below, starting from the next school year in August, the Ministry of Education said on Monday. The Regulations on the Use of Mobile Devices at Educational Facilities up to High Schools (高級中等以下學校校園行動載具使用原則) state that mobile devices — defined as mobile phones, laptops, tablets, smartwatches or other wearables — should be turned off at school. The changes would stipulate that use of such devices during class is forbidden, and the devices should be handed to a teacher or the school for safekeeping. The amendments also say
EMBRACING TAIWAN: US lawmakers have introduced an act aiming to replace the use of ‘Chinese Taipei’ with ‘Taiwan’ across all Washington’s federal agencies A group of US House of Representatives lawmakers has introduced legislation to replace the term “Chinese Taipei” with “Taiwan” across all federal agencies. US Representative Byron Donalds announced the introduction of the “America supports Taiwan act,” which would mandate federal agencies adopt “Taiwan” in place of “Chinese Taipei,” a news release on his page on the US House of Representatives’ Web site said. US representatives Mike Collins, Barry Moore and Tom Tiffany are cosponsors of the legislation, US political newspaper The Hill reported yesterday. “The legislation is a push to normalize the position of Taiwan as an autonomous country, although the official US
CONSISTENT COMMITMENT: The American Institute in Taiwan director said that the US would expand investment and trade relationships to make both nations more prosperous The US would not abandon its commitment to Taiwan, and would make Taiwan safer, stronger and more prosperous, American Institute in Taiwan Director Raymond Greene said. “The US’ commitment to Taiwan has been consistent over many administrations and over many years, and we will not abandon our commitment to Taiwan, including our opposition to any attempt to use force or coercion to change Taiwan’s status,” he said in an exclusive interview with the Liberty Times (the sister newspaper of the Taipei Times) on Friday last week, which was published in the Chinese-language newspaper yesterday. The US would double down on its efforts
RSS