by Ian Harvey
June 13, 2015
The week ahead in the stock market will probably continue to drift, but stay range-bound, as investors and traders wait for results from a debt-resolving deal between Greece and the EU; and also the outcome as Federal Reserve policymakers emerge from two days of meetings and hold a press conference on Wednesday afternoon.
As long as there is some type of Greek deal, a rally in equities and some relief for the euro could be on the cards.
The Fed interest rate hike in September or December has already been priced in by many traders; but any hints on whether it will move sooner or later could produce some ripple effects in stock, bond and currency markets.
Besides the Fed, there are a few important economic reports including industrial production Monday and the consumer price index on Thursday.
The 2015 Q2 earnings season will get underway this week with Adobe (ADBE) reporting after the close on Tuesday. All of these early reporters have fiscal quarters ending in May, which are counted as part of the 2015 Q2 tally.
Stocks in the past week were barely changed, despite volatile trading days, with the DOW gaining 0.28 percent for the week, to 17,898.84. The S&P 500 was up 0.06 percent at 2,094.11, while the Nasdaq closed lower, finishing at 5,051.10, off 0.34 percent.
Economic Drivers for the Week Ahead in the Stock Market
Federal Open Market Committee (FOMC) begins a two-day meeting on interest rate policy on Tuesday and markets will focus on U.S. Federal Reserve's statement on Wednesday.
Federal Open Market Committee
The Federal Open Market Committee meets on Tuesday, June 16 and Wednesday, June 17 in Washington. The committee's decision on interest rates, including a press conference with Chair Janet Yellen, is set for 2:30 p.m. EDT. The Fed isn't expected to increase interest rates until September, and new economic projections from the meeting will indicate whether that remains a reasonable timeline.
Consumer Price Index
May data from the Consumer Price Index is due out Tuesday. In April, the index rose at 0.3%, its fastest rate since January 2013. It was the third consecutive month with a gain in consumer-goods prices, bringing inflation closer to the Fed's targets.
Housing Starts and Building Permits
Expected out on Tuesday is data on May housing starts and building permits from the Commerce Department. Starts hit an eight-year high in April, with builders beginning work on 1.14 million homes, an increase of more than 20% from March. The national boom extended to all regions of the U.S. except the South, where building fell 1.8%. An especially brutal winter propelled much of the trend.
Earnings for the Week Ahead in the Stock Market
In total, there will be results from more than 30 companies this week, including 7 S&P 500 members.
Estimates have come down quite a bit in the run to the start of this earnings season, with total earnings for the quarter now expected to be down -7.2% from the same period last year, down from expectations of positive +1.1% growth in early January.
Companies Reporting in the Week Ahead in the Stock Market
Tuesday: Adobe Systems Inc., Jefferies Group LLC
Wednesday: FedEx Corp., Oracle Corp.
Thursday: Red Hat Inc., Kroger Co.
Friday: CarMax Inc.
For a full list of companies reporting in the week ahead for the stock market …..CLICK HERE…..
Stocks to Consider for the Week Ahead in the Stock Market
Companies to consider for Trading for the week ahead in the stock market, such as “Options Trades” – calls or puts -- this week are:-
Oracle Corp, the world's leading database company, is expected to report lower revenue and profit for its fourth-quarter as it transitions some of its business to a more investment-heavy cloud-computing model and copes with relatively weak overall technology spending by businesses in an uncertain economy.
FedEx Corp will report fourth-quarter results on Wednesday. The company is considered an economic bellwether, with shipping activity used as a proxy for overall economic activity. While the stock has done well this year, the transportation sector has lagged significantly.
Adobe Systems Inc is expected to report second-quarter profit above estimates. The Photoshop maker has been switching from traditional box licenses to web-based subscriptions for its Creative Cloud software bundle to help attract more predictable recurring revenue.
Red Hat Inc reports first-quarter results on Thursday, and is expected to report revenue marginally above analysts' estimates. Red Hat had forecast first-quarter profit in line with analysts' estimates despite warning on a strong dollar hurting its revenue.
Rite Aid Corp, the No. 3 U.S. drugstore chain is expected to post a rise in first-quarter sales, helped by strong prescription sales and is on track to a successful turnaround. The company has been remodelling stores, and has struck a renewed agreement with McKesson Corp for sourcing and distribution. Analysts say Rite Aid's recent acquisition of EnvisionRx will help its expansion plan. Furthermore, Rite Aid is an attractive target company for bigger players Walgreens and CVS Corp.
Kroger Co, the operator of Harris Teeter and Ralphs supermarket chains, is likely to report first-quarter profit and sales above analysts’ average estimate. Kroger cut prices on natural and organic goods in the quarter in certain markets which have traditionally shown less demand for such goods. It also cut prices on milk.
Darden Restaurants Inc reports fourth-quarter results on Friday, and is expected to report fourth-quarter profit and sales largely in line with market estimates. Darden had mentioned in its last quarter that it was looking to create value from real estate after traffic at its flagship Olive Garden chain continued to fall. The company had also announced new cost saving initiatives for Fiscal 2016, and is expected to provide more details on the same.
Conclusion for the Week Ahead in the Stock Market
This past week was the seventh week that the S&P has moved less than 1 percent in weekly moves – the longest since 1993. Many believe that the market will continue to churn in a range until the economic data proves to be consistent, and the Fed's path to rate hikes, are clearer.
The trend for the near future will see the technical action and further improvement in the economy likely moving rates higher between now and the end of the year. Also, higher yields will eventually make the dollar more attractive and this is typically a negative for the precious metal markets. In the short term the trend of the stock market is still the best profit potential for the investor.
It is expected that the major averages will likely close the year higher than the current levels experienced.
Keywords:The Week Ahead In The Stock Market, List of Companies Reporting Earnings for the Week Beginning 15th June, 2015