For investors, last week was a week to forget. Volatility, and the market’s losses, surged as the Federal Reserve rendered its decision on key benchmark interest rates. The Fed decided to keep its zero interest rate policies going for the foreseeable future. While normally the decision to keep the “easy money” flowing has resulted in stock market gains, this time was different. The Fed painted a darker cloud with regards to the world’s economic potential/future.
This week’s economic data could intensify those dark clouds. This week we’ll see data on manufacturing numbers, existing home sales and durable goods orders. However, the real fireworks will come at the end of the week when Fed Chairwomen Janet Yellen will give her thoughts on the economy, and the final quarter-over-quarter GDP numbers for the United States will be released.
As for dividend-related earnings, there are several major reports this week peppered among the economic data. Any dour or unexpected losses could send the markets into a tail spin.
After the previous week’s bout of volatility, Monday starts off kind of slow, with only data on existing home sales being released. That should be welcome news to wary investors and traders, though they shouldn’t get too comfortable. The measure of residential buildings sold during the previous month, after kicking out new construction, is seen as a leading indicator of economic health. Any poor number could up the volatility of the market. Analysts are only expecting five million homes to be sold, a decrease from the previous month’s number.
- Investors will get another dose of homebuilding data as Lennar Corporation (LEN ) is set to report earnings on Monday as well. There is no analyst estimate for LEN, but the stock yields 0.32%.
- Thor Industries Inc. (THO ) could also be seen as a consumer indicator. The maker of various recreational vehicles, campers and other parts is set to report EPS of $1.30. THO yields 2.0%.
Tuesday will see more housing data. The Federal Housing Finance Authority will report its House Price Index (HPI). The measurement looks at the change in prices of Fannie Mae and Freddie Mac-backed homes. Analysts are looking for a 0.4% increase. However, the last few times the number has been reported, analysts were way off and the HPI didn’t increase nearly as much as expected.
- Carnival Corporation (CCL ) is set to report quarterly profits of $1.63 per share before market open on Tuesday. The owner and operator of cruise ships yields 2.32%.
- Also set to report earnings before the opening bell is ConAgra Foods, Inc. (CAG ) .The maker of pickles, ketchup, and other food products is estimated to report profits of 40 cents per share for the latest quarter. Investors could buy a lot of the firm’s mustard with its 2.37% dividend yield.
- For investors looking for another food play, sector giant General Mills, Inc. (GIS ) is also set to report earnings on Tuesday. GIS will report profits of 69 cents per share before market open. GIS yields 3.11%.
- Don’t like to cook? Then restaurateur Darden Restaurants’ (DRI ) earnings will interest you. DRI is set to report EPS of 57 cents per share. The owner of the chains Olive Garden and Red Lobster yields 3.17%.
Wednesday will showcase some relatively low impact economic data. First, the Energy Information Administration will report crude oil inventories which are expected to showcase another drop by about 2.1 million barrels. Second will be the Flash PMI. The measure looks at how businesses are reacting to market conditions by asking them a series of questions about employment, production, new orders, prices, supplier deliveries, and inventories. The flash number is just an early estimate of the final number which is released a week later. Analysts expect an unchanged reading of 53.
- Worthington Industries, Inc. (WOR ) will report earnings on Wednesday. The maker of steel drums, tanks and other holding vessels is set to report EPS of 51 cents per share. WOR yields 3.23%.
- Following WOR, Steelcase Inc. (SCS ) is set to report earnings after market close. The office furniture and furnishings maker is set to report EPS of 32 cents per share and yields 2.45%.
Like last week, Thursday of this week is once again D-day with regards to economic data. Several big pieces of information will be released and the day should be a volatile one. Kicking things off is durable goods. The number looks at the value of new purchase orders placed with manufacturers for durable goods, minus airplanes and other transportation items. The number is hugely important as its serves as a current gauge of how the economy is doing. Analysts expect a 0.2% increase. Unemployment claims will also be released. Analysts expect an uptick in the number for first time fliers to reach 268,000. New home sales and natural gas storage numbers will also be released.
However, the real economic news on Thursday will come from Janet Yellen at the University of Massachusetts. Yellen will give her thoughts on the recent Fed decision and answer questions on the state of the economy. This report should overshadow any other data released on this day.
- As a uniform supplier, Cintas Corp. (CTAS ) can also be seen as an indicator of the economy. The company is set to report earnings of 91 cents per share. CTAS yields 0.98%.
- Fresher than a new pair of Jordans, Nike (NKE ) should also continue its dominance of sports apparel. NKE will report EPS of $1.19 per share after market close. Nike yields 0.97%.
Friday doesn’t let up on the economic data. While not having nearly as much as Thursday, Friday’s GDP number is probably one of the most important figures of the entire week. The number, which is the final reading of economic growth for the second quarter, is set to solidify the 3.7% figure reported back in August. Analysts are looking for at least that number. Any less and the markets could fall, any more and the markets should rally.
There are no dividend-related earnings to report.
The Bottom Line
Following the Fed’s rate decision last week, this week will shape up to be another doozy. There is plenty of economic data that could help or hinder the market this week, especially considering how on edge most investors and traders are. Adding to those jitters could be all the earnings announcements tied to key sectors of the market. Consumer and key business plays will all report. At the end of the week, we could be looking back on another whipsaw trading market.
Correction: In the September 21 Market Glance, we reported that Darden Restaurants, Inc. (DRI ) owned the restaurant chain Red Lobster among is stable of brands. However, that is no longer true. Back in May, DRI sold the chain to private equity firm Golden Gate Capital.