Market volatility could be tested mid-week, with the release of important CPI and Core CPI data. With analysts expecting a slight contraction in inflation for the July period, the Fed will be watching this release closely due to the expected rate rise in September. Other key economic announcements during the week include Housing Starts and Building Permits on Tuesday, the FOMC minutes on Wednesday, and Existing Home Sales and the Philadelphia Fed meeting on Thursday.
Eurozone finance leaders agreed to Greece’s bailout terms late last week, with €86 billion expected to be unlocked in tranches. The first payment will be made this week on the 20th of August.
China’s Shanghai Composite bucked the downtrend in trade on Monday, with the index finishing 0.7% higher. Stabilization in the yuan, coupled with comments from the securities regulator on Friday, helped subdue volatility. In an effort to support the market, Chinese officials have highlighted that their role may be ongoing for the foreseeable future.
U.S. equity futures are pointing to a relatively subdued start to the session due to limited economic data and earnings to be released. The New York Fed Empire State Index will be released before market open, with economists forecasting a rise from 3.9 to 5 in August.
- General Electric (GE ) received welcomed news from European regulators on Friday, with the approval of the $14 billion Alstom deal. GE has a dividend yield of 3.53%.
- Estée Lauder (EL ) reported a fall in net income for the fourth quarter, with EPS coming in at 40 cents. Net sales also contracted for $2.52 billion. EL has a dividend yield of 1.08%.
- Agilent Technologies (A ) will report quarterly earnings after market, with analysts forecasting a 41 cent EPS. A has a dividend yield of 1.03%.
Housing Starts and Building Permits will command much of the attention on Tuesday, with both reports expected to be released at 8:30 am. Measuring the residential activity, Housing Starts in July are forecast to come in at 1.2 million, which is slightly above the previous period. Building Permits, however, are expected to fall from 1.34 million to 1.21 million.
- Home Depot (HD ) is set to release earnings before market open on Tuesday, with analysts forecasting an EPS of $1.71. HD has a dividend yield of 1.97%.
- La-Z-Boy Inc. (LZB ), the furniture manufacturer and supplier, will announce quarterly earnings after market on Tuesday. The company is expected to report an EPS of $0.21. LZB has a dividend yield of 1.19%.
CPI data will precede the FOMC minutes on Wednesday, with investors looking for monetary policy clarity. Inflation is expected to fall to 0.2%, whilst Core CPI is forecast to remain unchanged for the period. Core excludes food and energy.
- Eaton Vance (EV ) is set to release its quarter earnings before market open on Wednesday, with analysts forecasting earnings of $0.62 per share. Eaton Vance is a leading investment manager based out of Boston, with a dividend yield of 2.58%.
- Target (TGT ) earnings will be announced before market open, with the company expected to post an EPS of $1.11. TGT has a dividend yield of 2.84%.
Unemployment Claims, the Philadelphia Fed Manufacturing Index, and Existing Home Sales will be reported on Thursday, with the market pricing in a slight softening in jobs data. Reporting at 10 am, the Philly Fed’s Manufacturing figures are good regional business insight. This is expected to rise from 5.7 to 7.2. In China, the Caixin Flash Manufacturing PMI will be released, with economists looking for a rise for the period from 47.8 to 48.1.
- The Gap Inc. (GPS ), the American apparel supplier, is expected to announce earnings of $0.65 per share after market close on Thursday. GPS has a dividend yield of 2.69%.
- Hewlett Packard (HPQ ) is expected to announce an EPS of 85 cents on Thursday. Citigroup recently reaffirmed its Buy rating on the stock. HPQ has a dividend yield of 2.45%.
Quiet session on Friday with no key economic data to be released.
- Deere & Co. (DE ), the farm and machinery supplier, is expected to announce their quarter earnings on Friday. Analysts are pricing in an EPS of $1.42. DE has a dividend yield of 2.54%.
The Bottom Line
Inflation and the FOMC minutes on Wednesday will define the market trend this week.