The Week Ahead: How Much Longer Will it Last?

 | Apr 01, 2013 | 6:00 AM EDT  | Comments
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Stock quotes in this article:

mck

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gbx

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mon

Last week's shortened trading period also closed out the first quarter -- which, all told, was a strong one for the major stock market indices. The Dow Jones Industrial Average reached as high as 12.7%, and the lowest peak was an 8.2% gain for the Nasdaq Composite. Those are strong results -- some of the best in years. If I had one bone to pick it would be that, despite the solid March results, the bulk of the year-to-date gains were registered during January.

Thanks to the strong run in the market and the improving domestic fundamentals, Wall Street strategists are now upping their forecasts. Case in point: Wells Fargo Advisors just raised its year-end 2013 target for the S&P 500 to between 1575 and 1625, up from the prior range of 1525 to 1575. In other words, Wells Fargo sees an additional 3% to 4% of upside in the S&P 500 from Thursday's close.

This of course raises the question of whether there is really more upside to be had, or if the markets are instead nearing a top. The latter has been a frequent question in recent weeks amid new all-time highs for both the Dow and the S&P 500. But the rebounding housing and automotive markets are clearly aiding in the domestic recovery, given the multiplier effects they jointly have on jobs, durable goods and manufacturing. Should those two markets recover more than expected in the coming months, they will be key drivers of the economy, potentially leading it to grow as much as 2.5% in 2013.

This week we'll see if that view holds up. We'll be getting a rash of domestic manufacturing and construction data for both February and March, as well as the latest reading on auto and truck sales. Buried inside those figures are two components that I'll be watching closely -- new orders and prices. Favorable new-order data will point to further improvement in the coming months, while the price figures will indicate whether margins could be vulnerable and if companies are poised to issue price increases.

Also on tap this week will be Friday's March employment report, which means we'll see a number of other indicators lead up to it. As with the manufacturing data, I'll be digging into the March jobs numbers in order to examine average hours worked, overtime and average hourly wages. One of my areas of concern is the consumer's ability to do just that -- consume. February's personal income and spending data held up better than expected, but consumer savings figures remain weak.

Although it's the first week of the new quarter, we'll still be seeing earnings reports from a few key companies. Given my concern over the consumer, I'll be paying closely to comments from McCormick (MKC), ConAgra (CAG) and Shoe Carnival (SCVL). Also, several weeks back I raised my worries about rail traffic and the demand for new freight cars -- so I'll be dissecting the order and backlog figures when Greenbrier (GBX) reports its latest quarterly results, scheduled for this week. Those results will impact Trinity (TRN), American Railcar (ARII) and FreightCar America (RAIL).

Lastly, we're rushing headlong into the spring planting season for famers, and that means comments from Monsanto (MON) will be closely watched this week. These results stand to serve as a demand gauge for fertilizer, irrigation and agriculture equipment from companies such as Potash (POT), Agrium (AGR), Xylem (XYL), Deere (DE) and AGCO (AGCO).

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Economic Calendar

Monday, April 1

  • HSBC China Manufacturing Purchasing Managers Index (March)
  • Markit U.S. Manufacturing PMI (March)
  • Institute for Supply Management Manufacturing Index (March)
  • Construction Spending (February)

____

Tuesday, April 2

  • Markit Eurozone Manufacturing PMI (March)
  • J.P. Morgan Global Manufacturing PMI (March)
  • Factory Orders (February)
  • Auto and Truck Sales (March)

____

Wednesday, April 3

  • HSBC China Services PMI (March)
  • Mortgage Bankers Association Mortgage Index (Weekly)
  • ADP Employment Change Report (March)
  • ISM Services Index (March)

____

Thursday, April 4

  • HSBC Emerging Markets Index (March)
  • Markit Eurozone Services PMI (March)
  • J.P. Morgan Global Services PMI (March)
  • Challenger Job Cuts Report (March)
  • Initial and Continuing Jobless Claims (Weekly)

____

Friday, April 5

  • Employment Report (March)
  • Consumer Credit (February)

 

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Earnings Calendar

Monday, April 1

  • American Shared Hospital Services (AMS)
  • Lifeway Foods (LWAY)
  • Shoe Carnival (SCVL)

____

Tuesday, April 2

  • Global Payments (GPN)
  • McCormick & Co. (MKC)

____

Wednesday, April 3

  • Acuity Brands (AYI)
  • ConAgra Foods (CAG)
  • Monsanto Co. (MON)

____

Thursday, April 4

  • Greenbrier Companies (GBX)
  • International Speedway (ISCA)
  • WD-40 Company (WDFC)

____

Friday, April 5

  • Penford Corp. (PENX)

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