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Down 41% and counting! From the high on October 9, 2007 through this past Friday, that's how much the Dow Jones Industrials Index is down. I'm quite sure you didn't need me to point that out to you though, as your 401K and brokerage statements probably get the message across well enough.
Last week, we gave back the 4.7% gain from two weeks ago, as the Dow slipped 5.3%. The driver of this most recent pain was somewhat clear. Earnings season is now firing on all cylinders, and the damage of economic decline is being seen far and wide across America's corporations. Last week's EPS reports read more like an obituary list. On Monday, chatter grew louder around the pending demise of Circuit City (NYSE: CC), as it seems unlikely its assets will be acquired before bankruptcy. At least 150 stores hang in the balance. On Tuesday, National City (NYSE: NCC) announced it would lay off 4K employees, and by Friday it was acquired on the cheap by PNC Bank (NYSE: PNC). Cyclical chemicals producer DuPont (NYSE: DD) reported profits sank 30%, and cut its outlook. On Wednesday, Boeing (NYSE: BA) noted that it took a big strike-related hit in its quarter, while Merck (NYSE: MRK) saw its net profits drop, as it let go of 7,200 workers.
Wachovia (NYSE: WB, NYSE: WFC), perhaps more open than most banks now that its acquisition is sealed, declared a $24 billion loss. Travelers Insurance (NYSE: TFC) profits fell 82% on storm related losses. On Thursday, Goldman Sachs (NYSE: GS) announced it would lay off 10% of its employees, while Chrysler indicated it would reduce its salaried workforce by 25% (5,000 jobs). Meanwhile, Sony (NYSE: SNE) slashed its forecast and Toyota (NYSE: TM) reported quarterly auto sales fell for the first time in seven years, sending the NIKKEI down 9.6% on Friday. Finally, to close out the week, Aflac (NYSE: AFL) noted an Iceland related hit and a tough quarter. The scene was pitiful, as even the companies that posted solid results, still warned on their outlooks.The Week Ahead
Earnings season report flow will still be heavy this week, and the gist of the news should reflect as poorly on the economy as last week's data did. The economic schedule was light last week, which at least offered a respite from that angle. We even had a surprisingly strong existing home sales report for the month of September. This week, however, will be much different. A couple economic events might offer both reason for retreat and inspiration for rise.Monday
The only economic report of the day will be the New Home Sales Report at 10:00 a.m. Last week's news from existing home sales, a much larger market not influenced by home builder decision making, showed stronger sales than were expected. Regarding new home sales, Bloomberg's consensus of economists is looking for the annual pace of sales to show slippage of 10K in September, to 450K.
The Federal Reserve will kick off its new commercial paper funding facility on Monday. Meanwhile, in Chicago, bankers will attend the "Economic Credit Summit."
A few Asian markets catch a breather on Monday, as bourses in Malaysia, Singapore and New Zealand stay shut. In the U.S., look for earnings news from Verizon (NYSE: VZ), Alberto Culver (NYSE: ACV), AmeriCredit (NYSE: ACF), Arch Coal (NYSE: ACI), Atheros Communications (Nasdaq: ATHR), Bank of Hawaii (NYSE: BOH), BE Aerospace (Nasdaq: BEAV), Buffalo Wild Wings (Nasdaq: BWLD), Calamos Asset Management (Nasdaq: CLMS), CNA Financial (NYSE: CNA), Crane (NYSE: CR), East West Bancorp (Nasdaq: EWBC), Loews (NYSE: L), FPL Group (NYSE: FPL), Humana (NYSE: HUM), ICICI Bank (NYSE: IBN), Penn National Gaming (Nasdaq: PENN), PrePaid Legal (NYSE: PPD), SOHU.com (Nasdaq: SOHU), Tidewater (NYSE: TDW), Travelzoo (Nasdaq: TZOO) and more.Tuesday
As we outlined last week, the ICSC Weekly Same-Store Sales
data has been steadily deteriorating since the end of "back to school" shopping season. We see no reason for improvement in this week's reporting.
You'll also want to look for S&P Case Shiller's Home Price Index, typically reported in the premarket. Prices continued their descent in July, and are expected to have fallen further in August.
The Conference Board's latest take on Consumer Confidence is due at 10:00 AM ET on Tuesday. As one might expect, economists are looking for softening consumer faith in October, to an index level of 52.0, versus 59.8 in September.
Of course, the FOMC policy meeting begins on Tuesday, but an announcement is not due until Wednesday, unless market activity dictates increased urgency. Treasury Secretary Paulson will address a securities industry trade group, potentially offering a market-moving phrase.
The Indians of Hinduism, Sikhism and Jainism faiths celebrate Diwali on Tuesday. Diwali is known as the festival of lights, when these faiths and Nepal Buddhists celebrate the victory of good over evil in each individual. Needless to say, Indian markets will be closed. A noteworthy investment conference on Mongolia begins in Ulan Bator.
In the States, Pfizer (NYSE: PFE) has an analyst/investor meeting, and earning reports will be disseminated by Honda Motor (NYSE: HMC), SAP AG (NYSE: SAP), McGraw-Hill (NYSE: MHP), Whirlpool (NYSE: WHR), McKesson (NYSE: MCK), Occidental Petroleum (NYSE: OXY), Valero (NYSE: VLO), Entergy (NYSE: ETR), Apollo Group (Nasdaq: APOL), Arthur J. Gallagher (NYSE: AJG), Beckman Coulter (NYSE: BEC), Black Box (Nasdaq: BBOX), Boyd Gaming (NYSE: BYD), British Petroleum (NYSE: BP), CACI Int'l (NYSE: CAI), Centex (NYSE: CTX), Check Point Software (Nasdaq: CHKP), Cynosure (Nasdaq: CYNO), FEI Co. (Nasdaq: FEIC), Fiserv (Nasdaq: FISV), Flowserve (NYSE: FLS), GMarket (Nasdaq: GMKT), Luxottica (NYSE: LUX), Manitowoc (NYSE: MTW), Panasonic (NYSE: PC), RF Micro Devices (Nasdaq: RFMD), Smith Int'l (NYSE: SII), STMicroelectronics (NYSE: STM), Estee' Lauder (NYSE: EL), Under Armour (NYSE: UA) and more.Wednesday
At 2:15 PM ET, the Federal Open Market Committee will announce its monetary policy decision on Wednesday afternoon, and economists are talking about another 50 basis point rate cut. At this point, the market is seeking any help it can get, and anything less than 50 points would just give it more reason to give up all hope. The SEC will hold a roundtable on the topic of mark-to-market accounting, the logical rule of law that has helped to force many firms into insolvency recently.
At 8:30 AM, economists expect Durable Goods Orders for the month of September will be reported decreased by 1.1%. The report for August showed a 4.5% decline after several months of growth. The regular Mortgage Activity Report is due, but has not moved markets of late and for good reason. The Petroleum Status Report, due at its usual 10:30, has produced consistent inventory builds over recent weeks. OPEC's most recent production cut should not play a role in this week's data.
The United Nations is scheduled to hold a forum on the topic of migration and development. The Museum of American Finance, located in Downtown Manhattan, within the financial district, will examine the platforms of the presidential candidates.
The Biotechnology Industry Organization starts its investor forum Wednesday, and earnings news is due from Aetna (NYSE: AET), AGCO (NYSE: AG), Legg Mason (NYSE: LM), TheStreet.com (Nasdaq: TSCM), Allied Waste (NYSE: AW), Ameriprise Financial (NYSE: AMP), Amkor (Nasdaq: AMKR), Atmel (Nasdaq: ATML), Cal Dive Int'l (NYSE: DVR), Cardinal Health (NYSE: CAH), Chicago Mercantile Exchange (NYSE: CME), Comcast (Nasdaq: CMCSA), First Solar (Nasdaq: FSLR), Garmin (Nasdaq: GRMN), Harman Int'l (NYSE: HAR), Kraft Foods (NYSE: KFT), Maxim Integrated Products (Nasdaq: MXIM), MetLife (NYSE: MET), Monaco Coach (NYSE: MON), Newmont Mining (NYSE: NEM), Noble Energy (NYSE: NBL), Praxair (NYSE: PX), Procter & Gamble (NYSE: PG), Sanmina-SCI (Nasdaq: SANM), Sealed Air (NYSE: SEE), Symantec (Nasdaq: SYMC), Tesoro (NYSE: TSO), ValueClick (Nasdaq: VCLK), Visa (NYSE: V) and more.Thursday
If a letdown doesn't materialize from the FOMC announcement on Wednesday, then Thursday's first reporting of third quarter GDP might do the trick. For the first time through this mess, economists see a quarterly decline of 0.5%. Remember, it takes two of those to call it a recession, but that seems in the bag. In case you were wondering, Q2 registered 2.8% growth on final tally.
Weekly Initial Jobless Claims are seen running at 475K, after last week increase to 478K. Claims have been running hot, and we continue to believe an eventual reading of 500K+ would prove a significant negative catalyst for stocks. Look for the regular EIA Natural Gas Report at 10:30.
On Thursday, the American Enterprise Institute examines the deflating housing bubble, while the Joint Economic Committee considers another economic stimulus package. A Carbon Market Expo is scheduled in Australia.
Indian markets remain closed Thursday. Otherwise, look for earnings reports from Deutsche Bank (NYSE: DB), Diebold (NYSE: DBD), Genco Shipping (NYSE: GNK), Monster Worldwide (Nasdaq: MNST), Affiliated Computer Services (NYSE: ACS), Akamai (Nasdaq: AKAM), Alcatel-Lucent (NYSE: ALU), Alliant Techsystems (NYSE: ATK), AmeriSourceBergen (NYSE: ABC), Apache (NYSE: APA), AstraZeneca (NYSE: AZN), Ball (NYSE: BLL), Barrick Gold (NYSE: ABX), BJ Services (NYSE: BJS), Chesapeake Energy (NYSE: CHK), Cincinnati Bell (NYSE: CBB), Colgate-Palmolive (NYSE: CL), CVS Caremark (NYSE: CVS), Electronics Arts (Nasdaq: ERTS), Expedia (Nasdaq: EXPE), ExxonMobil (NYSE: XOM), Furniture Brands (NYSE: FBN), KLA-Tencor (Nasdaq: KLAC), MICROS Systems (Nasdaq: MCRS), Motorola (NYSE: MOT), Oceaneering Int'l (NYSE: OII), Psychiatric Solutions (Nasdaq: PSYS), Shaw Group (NYSE: SGR), Sun Microsystems (Nasdaq: JAVA), Waste Management (NYSE: WMI) and more.Friday
The Bank of Japan should get Halloween rolling Friday (or roiling). The BOJ may cut its already low interest rates. Last week, the yen appreciated sharply against the dollar as investors unwound carry trades. A cut, therefore, might serve dual purpose; that being economic lift and yen stabilization.
A slew of economic data is due to flood the wires Friday. At 8:30 AM, Personal Income and Outlays are due. Economists are looking for 0.1% income growth and 0.3% lower spending in September. This after 0.5% income growth and unchanged spending in August.
At 9:45, look for NAPM Chicago's latest reading (October) to measure 48.0, versus 56.7 in September. Recall, a level below 50.0 indicates economic contraction. The University of Michigan offers its last take on October consumer sentiment at 9:55. Economists expect the metric to stick at the relatively low level of 57.5. Farm Prices are due at 3:00 PM.
Markets are closed in Chile, but Friday's earnings reports States-side highlight Clorox (NYSE: CLX), NYSE Euronext (NYSE: NYX), Danaos (NYSE: DAC), American Electric Power (NYSE: AEP), Apartment Investment & Management (NYSE: AIV), Burger King (NYSE: BKC), Chevron (NYSE: CVX), Goldcorp (NYSE: GG), Sanofi-Aventis (NYSE: SNY), Weyerhauser (NYSE: WY) and more.Please see our disclosures at the Wall Street Greek website and author bio pages found there. Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK.
Labels: Week Ahead