Week Ahead: Apple and Facebook in the Spotlight!
Earnings Provide a Busy Week Again!
by Ian Harvey
July 23, 2012
The trend of better-than-expected earnings will be put to the test in the week ahead when investors hope Apple (AAPL) can exceed already high expectations for the tech giant and Facebook (FB) reports its first quarterly earnings. And for the economy, Friday’s U.S. GDP report could have a major impact on sentiment.
Earnings in the Week Ahead
Among the other 138 S&P 500 companies reporting earnings – besides Apple and Facebook -- are Ford Motor Co (F), United Parcel Service (UPS) and Whirlpool Corp (WHR).
Apple accounts for a significant proportion of the overall earnings of Standard & Poor's 500 Index (SPX) components. S&P 500 earnings are expected to show a rise of 5.7 percent in the second quarter from a year ago. Excluding the maker of the iPad, the rise is 4.8 percent, according to Thomson Reuters data.
Apple's results, due Tuesday, could help stocks build on this week's gains and counter investor worries over the euro zone crisis.
Apple is a huge psychological component which has the ability to drive the whole tech group!
Apple's expected strong performance is mainly why technology earnings growth has held up better than other S&P 500 sectors. The expected growth rate for the sector has gone from 6.9 percent in April to 8.7 percent as of Friday, the data showed.
Apple's earnings for the quarter are seen at $10.38 a share, based on Thomson Reuters, which includes estimates from 43 analysts. That compares with a profit of $7.79 a share for the year-ago quarter.
Investors are likely to be just as keen to hear from Facebook when it reports on Thursday. Facebook's first results following its market debut could give investors another chance to indicate how they feel about the stock since its disappointing initial public offering.
Shares of Facebook, one of the most closely watched IPOs ever, lost ground after technical problems with its market debut on Nasdaq and as investors questioned its ability to rapidly increase advertising revenue.
Analysts said an earnings miss by Facebook could be disastrous for the stock, which closed Friday at $28.76, below its $38 offering price.
Investors are looking for executives to address a litany of concerns about the business, such as the efficacy of its online ads and the company's nascent efforts in mobile advertising.
Tech results also will be closely watched for signs of weak demand overseas, particularly from Europe. Other technology companies expected to report next week include Texas Instruments (TXN) and Amazon.com (AMZN). Of the S&P sectors, technology has the highest sales exposure to Europe at about 25 percent, according to a Bank of America/Merrill Lynch research note.
TOP OPTIONS TRADES SINCE JUNE 01, 2012
|HLF July 47.50 Calls||53%||APPL Aug 650 Calls||67%|
|DLTR Aug 110 Calls||32%||UIS Oct 17 Calls||79%|
|HSY Aug 70 Calls||56%||TSO Nov 25 Calls||54%|
|NKE Oct 92.50 Calls||49%||HLF July 47.50 Calls (again)||38%|
Economy in the Week Ahead
Friday’s U.S. GDP report, expected to show 1.5 percent growth for the second quarter, could have a major impact on sentiment, even though it is a backward looking indicator.
Here is a brief list of some of the key events in the week ahead.
All earnings dates listed below are tentative and subject to change. Please check with each company's respective website for official reporting dates.
Earnings: McDonald’s, Halliburton, Hasbro, Eaton, Baidu, Celanese, Phillips Electronics, Texas Instruments, VMWare, Baidu
• 7.00 pm Federal Reserve Gov. Sarah Raskin speaks in Colorado on community banking
Earnings: Apple, AT&T, DuPont, UPS, Lockheed Martin, SAP, Biogen Idec, Peabody Energy, UnderArmour, Whirlpool, Illinois Toolworks, Panera, Range Resources, Aflac, Broadcom, Cabot Oil, Norfolk Southern, Netflix, Aflac, Buffalo Wild Wings.
• 8.45 am Fed Chairman Ben Bernanke speaks about early childhood education at Children’s Defense Fund conference
• 10.00 am Richmond Fed
• 10.00 am FHFA home prices
• pm $35 billion 2-year note auction
Earnings: Boeing, Ford, Caterpillar, Pepsico, General Dynamics, Northrop Grumman, ConocoPhillips, Visa, Whole Foods, Owens Illinois, Akamai, Nasdaq OMX, Airgas, Wyndham World, WellPoint, GlaxoSmithkline, Bristol-Myers Squibb, Crocs, Zynga, Shutterfly, Arch Coal, Cheesecake Factory, Tupperware, US Airways, JetBlue, Motorola Solutions, Southern Co.
• 7.00 am Mortgage applications
• 10.00 am New home sales
• 1.00 pm $35 billion 5-year note auction
Earnings: Exxon Mobil, Facebook, Amazon.com, MMM, United Technologies, Starbucks, Banco Santander, CME Group, Credit Suisse, Dow Chemical, Colgate-Palmolive, Kimberly Clark, Hershey, International Paper, AstraZeneca, Siemens, Unilever, Occidental Petroleum, Raytheon, Starwood, Moody’s, Potash, Sprint Nextel, Waste Management, McKesson, Chubb, Expedia, Taubman Centers
• 8.30 am Durable goods
• 8.30 am Jobless claims
• 10.00 am Pending home sales
• 1.00 pm $29 billion 7-year note auction
Earnings: Chevron, KKR, Merck, Barclays, Newmont Mining, Total, Weyerhaeuser, Helmerich and Payne, Calpine, DR Horton, Legg Mason, Newell Rubbermaid
• 8.30 am Q2 GDP
• 9.55 am Consumer sentiment
Early in the week ahead, flash PMI data is expected for China and Europe, which should how well manufacturing activity is holding up. Analysts are watching to see if there are any signs China’s slowdown is bottoming.
Spain will tap the markets Tuesday when it sells three- and six-month bills. It will also sell three- and five-year bonds on August 2. Spain's 10-year bond yields hit a euro-era high of 7.3 percent on Friday.
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