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Nervous investors look ahead to earnings

/ Source: The Associated Press

Newly skittish investors were expected to parse every earnings report and every bit of economic data in the coming week, hoping to determine if the latest lull in economic growth is an isolated incident or a disturbing new trend.

The Federal Reserve’s decision Wednesday to hike interest rates by a quarter percentage point was initially seen as a chance to start a summer rally in the stock market. But Friday’s disappointing job creation report led to new worries over the health of the economy.

Wall Street was expected to look to second quarter earnings reports, the bulk of which are due later in the month, for better signs of economic growth. This week, Dow Jones industrial average components Alcoa Inc. and General Electric Co., along with technology bellwether Yahoo! Inc., were expected to report their latest quarterly earnings.

Investors hoping for better economic data were likely to be disappointed, with few new indicators scheduled to be released during the holiday-shortened week. Reports on wholesale inventories, consumer credit use and first-time unemployment claims are all due Thursday.

With a slowdown in consumer purchases already rippling through the economy, economists expect wholesale inventories to increase by 0.5 percent in May, up from the 0.1 percent decline in April, as demand decreases.

However, consumer credit — the amount of money Americans owe — is expected to rise by $7 billion in May, up from $3.5 billion in the previous month. Low interest rates were expected to fuel an increase in car and home loans. Credit card debt is also expected to rise.

Economists are also expecting a slight decrease in jobless claims from the past week’s 351,000 new claims.