The uncertainty that has at times waylaid Wall Street in the new year might be less of a factor in the coming week now that investors have been placated by generally good corporate earnings and upbeat comments from the Federal Reserve.
After putting up double-digit gains in the second half of 2006, the major indexes have treaded a little more carefully in 2007, at times making modest advances and then often resting or pulling back before moving higher. While such retrenchments are often viewed as a way to lay a solid foundation for further gains, they can also signal unease among investors.
Last week, stocks rose sharply, however, after the Federal Reserve decided to leave short-term interest rates unchanged for the fifth straight time and said the economy looked solid and that inflation appeared mostly under control. For the week, the Dow was up 1.33 percent, while the Nasdaq gained 1.66 percent and the S&P 1.84 percent.
Another busy week of earnings reports and profit forecasts could help build a consensus on where stocks go from here — whether the long bull run in stocks will continue or whether February will show more of the occasional pauses seen in January.
The same-store sales figures, which reflect sales at stores open at least a year, could offer insight into the health of the consumer. As consumer spending drives more than two-thirds of economic activity, Wall Street is keen on keeping consumers on the treadmill to maintain corporate profits. And with more than half of the companies that make up the S&P 500 having already reported, concerns of sharply eroding profits have eased somewhat.
On Monday, Wall Street expects to receive the Institute for Supply Management’s January non-manufacturing index, which covers the service sector.
Tuesday brings a Treasury Department auction of 3-year notes and a speech from San Francisco Federal Reserve President Janet Yellen examining the financial crisis that rocked Asia a decade ago. Asia still holds a crucial place in the investing world. Last week, weakness in the Japanese yen and frothy stock markets in Shanghai stirred some concerns among investors.
On Wednesday, the Labor Department is expected to release its preliminary report on fourth-quarter productivity. The findings could draw interest as the cost of hiring and maintaining employees has been a concern among some investors. Wage inflation would make it less likely for the Federal Reserve to lower interest rates.
Also Wednesday, the Fed is expected to release its consumer credit report for December. It offers a sometimes volatile reading of consumer debt.
That day the government plans a 10-year Treasury note auction and the Energy Department plans to release weekly data on crude inventories.
Thursday brings and weekly data on unemployment claims and Commerce Department figures on wholesale inventories. And major retailers will announce their sales figures for January.
On Monday, Anadarko Petroleum Corp. is expected to report fourth-quarter earnings of $1.26 per share; the report follows robust earnings seen throughout the oil industry. Anadarko closed at $43.83 Friday, and has traded within a 52-week range of $39.51 and $58.98.
On Tuesday, Cisco Systems Inc. is expected to report second-quarter profit of 31 cents per share. It closed at $27.14 on Friday, at the higher end of its 52-week range of $17.10 to $28.99.
Conglomerate Tyco International Ltd. is set to report Tuesday and is seen earning 44 cents per share for its fiscal first quarter. Shares finished at $33, near the top of its 52-week range of $24.65 to $32.97.
Walt Disney Co. leads a parade of results on Wednesday, and is expected to earn 39 cents per share for its fiscal first quarter. Shares ended the week at $35.18, near the top of its 52-week range of $73.08 and $96.
On Thursday, PepsiCo Inc. leads off one of Wall Street’s busiest days for earnings reports. The snack and beverage company is expected to report a profit of 72 cents per share for the fourth quarter. Shares closed at $65.04, just off the top end of its 52-week range of $58.51 and $65.99.
Insurer Aetna Inc. is expected to report a profit of 76 cents per share. The stock, which has traded from $30.94 to $52.48 in the past 52 weeks, closed Friday at $42.52.
On Friday, MasterCard International Inc. will report fourth-quarter profits that are expected to reach 17 cents per share. The stock ended at $110.96, and has traded within a 52-week range of $40.20 and $113.08.