MARKET SNAPSHOT: Wall Street Braces For Feeding Frenzy Of Earnings, Central Bank Action
23 July 2016 - 1:17PM
Dow Jones News
By Sue Chang, MarketWatch
Apple is expected to report its second straight quarter of
iPhone declines
The stock market will be bombarded with news next week, giving
investors plenty to trade on, as earnings kick into high gear and
more than a dozen central banks hold monetary policy meetings.
The S&P 500 index climbed 9.86 points to a fresh record
close of 2,175.03. For the week, the large-cap index rose 0.6%. The
Dow Jones Industrial Average gained 53.62 points to finish at
18,570.85, adding 0.3% for the week. The Nasdaq Composite Index
advanced 26.26 points to close at 5,100.16, finishing the week 1.4%
higher.
The S&P 500 closed above 2,135, a level where there had been
a lot of resistance previously, suggesting that the market has the
breadth to eventually push to 2,400, according to Katie Stockton,
chief technical strategist at BTIG.
The market's upside momentum has been partly fueled by
better-than-anticipated earnings.
"With 25% of the companies in the S&P 500 reporting earnings
to date for second quarter 2016, 68% have reported earnings above
the mean estimate and 57% have reported sales above the mean
estimate," said John Butters, senior earnings analyst at FactSet,
in a note.
Among big multinationals on deck to release results next week
are McDonald's Corp.(MCD), Twitter Inc.(TWTR), Coca-Cola Co.(KO),
Facebook Inc.(FB), Ford Motor Co.(F), Alphabet Inc.(GOOGL),
Amazon.com Inc.(AMZN), Exxon Mobil Corp.(XOM), and Chevron
Corp.(CVX).
But none will generate as much buzz as Apple Inc.(AAPL).
Analysts surveyed by FactSet are projecting the tech giant to
report fiscal third-quarter earnings
(http://www.marketwatch.com/story/apple-earnings-another-iphone-decline-stronger-software-revenue-expected-2016-07-22)
of $1.40 a share, down from $1.85 a share in the year-earlier
quarter on the back of a double-digit drop in iPhone sales. If
Apple's earnings slide year-over-year as forecast, it will mark the
first time since fiscal fourth quarter of 2013 that the company
witnesses two quarters in a row of earnings decline.
On the policy front, 15 central banks are scheduled to meet, but
the Federal Reserve and the Bank of Japan will attract the most
attention given that they represent the world's no. 1 and no. 3
economies.
The Fed is forecast to keep interest rates on hold even as the
economy is clearly on the mend amid uncertainties over how the
U.K.'s planned exit from the European Union will impact the U.S.
Latest data show that the U.K. is poised for another recession
(http://www.marketwatch.com/story/uk-economy-in-dramatic-downturn-after-brexit-vote-data-show-2016-07-22)
with business activity deteriorating in the wake of the Brexit
referendum.
With the Fed likely to stand pat, investors will be looking for
clues on whether the central bank is likely to make a move in
September or December, said Scott Brown, an analyst at Raymond
James.
The BOJ, on the other hand, is expected to further ease its
policy, which could include a rate cut and additional asset
purchases. In fact, expectations for a more potent stimulus package
in Japan is so widespread that the BOJ is facing the risk of
disappointing the global markets if it fails to act decisively,
according to BNP Paribas. Failure to launch may also result in the
Japanese yen strengthening against the U.S. dollar, which will
worsen Japan's headache as a strong currency erodes price
competitiveness.
Against the backdrop of lingering global uncertainties, Wall
Street banks are urging renewed focus on the U.S., which is faring
comparatively better than other developed markets.
Goldman Sachs earlier this week recommended investors to bet on
S&P 500 companies
(http://www.marketwatch.com/story/why-goldman-thinks-investors-should-seek-sanctuary-in-the-us-2016-07-20)
that derive most of their sales domestically given the resilience
of the U.S. economy, a view echoed by Morgan Stanley this week.
"Our stance remains that the U.S. equity market is the best one
in the world," said Adam Parker, chief U.S. equity strategist at
Morgan Stanley, in a report. "We think EPS expectations are
reasonably achievable for the next two quarters [and] that the base
case for the U.S. is positive earnings growth, whereas it is a
decline in any other region of the world."
(END) Dow Jones Newswires
July 23, 2016 08:02 ET (12:02 GMT)
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