The Dow Jones industrial average is now perched below the 13,000 mark, lifted last week by surprisingly strong earnings reports. If this week’s reports follow that trend, investors may send the index hurtling past that milestone.
So far, 16 of the 30 Dow component companies have released earnings from the first three months of the year, and 10 have beaten expectations. This week, six more Dow components report results, including Exxon Mobil Corp., which in 2006 posted the largest annual profit by a U.S. company, and Microsoft Corp., which investors will be eyeing for clues about the potential of the technology sector.
But while the Dow is back in record territory, and the Standard & Poor’s 500 and Nasdaq composite indexes are at their highest levels in more than six years, many market watchers are skeptical about Wall Street’s ability to extend last week’s streak with the same vigor. Volatility remains higher than it was before the stock plunge on Feb. 27 that sent the Dow tumbling 416 points, and although the market has recovered its losses, many of the same concerns that took the market down two months ago remain: high inflation, a weakening dollar and a slow housing market.
Investors will have a good deal of housing data to examine this week. Recently, reports have shown that the housing market is still tepid, but more resilient than many investors expected, suggesting that the troubles with subprime mortgages aren’t affecting the broader lending industry, and that homeowners won’t feel the need to rein in spending.
On Tuesday, the National Association of Realtors reports sales of existing homes in March. The market expects that 6.50 million existing homes were sold, down slightly from 6.69 million in February, according to the median forecast of economists surveyed by Thomson Financial. Also Tuesday, Standard & Poor’s releases its February index of home prices.
On Wednesday, the Commerce Department reports on new home sales in March. Economists predict that 851,000 new homes were sold in March, compared with 848,000 a month earlier.
Last week, benign inflation data also helped stocks surge. The Dow rose 2.77 percent, the S&P 500 rose 2.17 percent, and the Nasdaq rose 1.38 percent.
Another week of earnings
AT&T Inc. releases its earnings from the first quarter Tuesday. Analysts surveyed by Thomson expect the company to report profit of 61 cents per share. The phone company closed at $39.87 Friday, at the upper end of its 52-week range of $24.72 to $39.90.
Boeing Co.’s quarterly earnings come out Wednesday, and analysts expect the aerospace manufacturer to report profit of $1.02 per share. Boeing closed at $93.29 last Friday, at the high end of its 52-week range of $72.13 to $94.75.
Apple Inc.’s results also come out Wednesday and are expected to show quarterly profit of 64 cents per share. Apple closed at $90.97 Friday, at the upper end of its 52-week range of $50.16 to $97.80.
Thursday will bring Microsoft’s and ExxonMobil’s earnings. Microsoft’s profit is expected to be 46 cents per share. The software maker closed at $29.02 Friday, in the upper half of its 52-week range of $21.45 to $31.48.
ExxonMobil is expected to post a profit of $1.51 per share. The oil company closed at $79.86 Friday and set a fresh 52-week high of $79.80. Its previous high was $79.
Economic data rolls in
On Tuesday, the Conference Board releases its April index of consumer confidence. The market expects the index to slip to 105.7 from 107.2 in March, according to the median forecast of economists surveyed by Thomson Financial.
On Wednesday, the Commerce Department reports on orders of durable goods. Economists forecast that durable goods rose 1.1 percent in March, slightly faster than 1.0 percent in February.
Also Wednesday, the Federal Reserve releases its Beige Book, which details economic activity in various U.S. regions.
On Friday, the University of Michigan revises its index of consumer sentiment in April, and the Commerce Department releases its first estimate of first-quarter gross domestic product. Economists are anticipating GDP growth of about 2.0 percent, down from 2.5 percent in the fourth quarter.
Next week will also bring regional manufacturing indexes from the Chicago, Richmond and Kansas City Federal Reserve banks, and a speech in New York on Friday from San Francisco Fed President Janet Yellen.