Week Ahead: Corporate Earnings on Tap
Earnings season enters week number two, with a slew of financial companies due to report. Earnings are expected to grow by 12 percent (compared to the third quarter of 2010) for S&P 500 companies and by 14 percent, without those darned financials. If those estimates hold, companies will be adding to their stash of $2 trillion, which may compel some to hike their dividends.
Last year, S&P 500 companies paid out 26 percent of earnings in the form of dividends, down from 30 percent for much of the 2000s and below the 30-year average of 40 percent. The S&P 500's dividend yield is currently 2.2 percent, just about equal to the current yield on the 10-year Treasury. If companies stop sitting on their hands and return some of their profits to stockholders, yield-starved savers might be induced to jump into the stock market.
Maybe it was all a bad dream. While the S&P 500 dropped 18.8 percent from July 7 to October 3, it has subsequently recovered over 11 percent from Oct 4 - Oct 14. Markets have recouped nearly all of the ground lost since the US credit downgrade/debt ceiling fiasco and the Dow and NASDAQ are now both back in the black for the year.
- DJIA: 11,644, up 4.9% on week, up 0.6% YTD (biggest weekly point and percentage gain since week ended July 1)
- S&P 500: 1224, up 6% on week, down 2.6% YTD (biggest weekly percentage gain since week ended July 17 2009)
- NASDAQ: 2667, up 7.6% on week, up 0.6% YTD (biggest weekly point and percentage gain since week ended March 13 2009)
- November Crude Oil: $86.80, up 4.6% on week (Up $7.60 per barrel, or 9.60%, over the last two weeks)
- December Gold: $ 1683, up 2.9% on the week
Total bank failures for 2011 = 80 (4 new bank failures over weekend)
FACTOIDS OF THE WEEK: Consumer Edition
- Thomson Reuters/University of Michigan Consumer Sentiment (Oct): 57.5 (from 59.4 Sep)
- Consumer Expectations: 47, down more than 20 points this year; lowest level since May 1980
- Retail Sales: +1.1%
- Retail Sales ex-autos: +0.6% (double expectations)
- Median US Income 2000-2010: -7% (adjusted for inflation). Worst 10-year performance in records going back to 1967.
- Projected year when incomes will recover: 2021
IN THE WEEK AHEAD: Earnings season goes into full swing, while on the economic calendar, readings of inflation and housing data will dominate.
Mon 10/17:
Wells Fargo, Halliburton, IBM, Citigroup, Charles Schwab
8:30 Empire State Manufacturing Index
9:15 Capacity Utilization
9:15 Industrial Production
Tues 10/18:
Bank of America, Goldman Sachs, State Street, Coca-Cola, Johnson & Johnson, Apple, Intel, Yahoo
8:30 Producer Price Index
10:00 NAHB housing market index
Weds 10/19:
eBay, American Express, E*TRADE, Bank of NY Mellon Morgan Stanley Abbott Laboratories
8:30 Consumer Price Index
8:30 Housing Starts
2:00 Fed Beige Book
Thurs 10/20:
Southwest Airlines, McGraw-Hill, Microsoft, Fifth Third Bancorp, Philip Morris, AT&T
8:30 Weekly Jobless Claims
10:00 Existing Home Sales
10: 00 Leading Indicators
10:00 Philadelphia Fed Survey
Fri 10/21:
Schlumberger, Verizon, General Electric, Honeywell, McDonald's
