The Week Ahead: Not Exactly Moving Into Fourth Gear

 | Jun 30, 2013 | 7:00 PM EDT  | Comments
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With the close of Friday's trading, we ended the second quarter -- and all the major market indices have risen over those 13 weeks. The Dow Jones Industrial Average and the S&P 500 were up 2.3 to 2.4% for the quarter, while the Nasdaq Composite climbed more than 4.5%. In addition, all the major indices also closed the quarter 2.8% to 3.8% off their respective late-May highs, with the recent pullback fueled by comments from Federal Reserve Chairman Ben Bernanke over potential stimulus tapering. However, I continue to be of the mind that the market has misconstrued Bernanke's comments -- that he merely explained the scenario under which the Fed would tighten.

As we saw last week, the economic figures continue to suggest a tepid economy ahead, not the kind moving from third to fourth gear. Core capital goods orders, excluding defense and aircraft, rose 1.1% in May, on par with data from April and March. June production and orders figures fell for June in the Chicago purchasing managers index report, while prices paid jumped. Similar findings were had in both the June Empire State and the Kansas City Fed manufacturing Surveys. Meanwhile, the June Texas Manufacturing Outlook Survey showed improving orders, but also rising prices. 

While the coming trading week will be a short one, give the market's closure on the July 4 holiday, we'll be getting data flow that market watchers will use to confirm those regional readings. In particular, on Monday we're due to receive the June Institute for Supply Management manufacturing index for May, with the consensus estimating a modest move back into the expansion zone from "contraction." We'll also get the June auto and truck figures this week, as well as the ISM services and a few other reports. (Because of the holiday, weekly initial and continuing jobless claims data are set for Wednesday instead of the usual Thursday release.)

Aside from the June ISM manufacturing report, Friday's June employment report will be dissected for signs of whether U.S. citizens are indeed returning to the labor force. Given the Thursday holiday, Friday's trading could be even thinner than the usual light summer action. That, in turn, could exacerbate any potential market reaction, should the jobs numbers wow to the upside or fall short of expectations. As always, we'll get the ADP Employment Report and the Challenger Job Cuts Report heading up to Friday, and I'd expect pundits to tighten up their Friday figures based on those results.

Turning to the earnings front, just a trickle of companies is scheduled to report their results this week. Of those companies is Greenbrier (GBX), which should give us an early read on freight-car demand. Constellation (STZ) should offer some insight into the spirits, wine and beer markets. Those two reports could be early tells for what's ahead with Trinity (TRN), American Railcar (ARII) and FreightCar America (RAIL), as well as Molson Coors (TAP), Beam (BEAM) and Brown-Forman (BF.B). 

After the holiday weekend, it'll be back to business, with the earnings gauntlet upon us. Enjoy the Fourth with family, friends and loved ones!

__________________

Economic Calendar

Monday, June 1

  • Institute for Supply Management (ISM) Manufacturing Index (June)
  • Construction Spending (May)

____

Tuesday, June 2

  • Factory Orders (May)
  • Auto and Truck Sales (June)

____

Wednesday, June 3

  • Mortgage Bankers Association Mortgage Index (Weekly)
  • Challenger Job Cuts Report (June)
  • ADP Employment Report (June)
  • Initial & Continuing Jobless Claims (Weekly)
  • ISM Services (June)

____

Thursday, June 4

  • Stock Market Closed -- July 4 holiday

____

Friday, June 5

  • Employment Report (June)

 

__________________

Earnings Calendar

Monday, June 1

  • Advance Photonix (API)

____

Tuesday, June 2

  • Acuity Brands (AYI)
  • Greenbrier Companies (GBX)
  • Constellation Brands (STZ)
  • Zep Inc. (ZEP)

____

Wednesday, June 3

  • International Speedway Corp. (ISCA)

____

Thursday, June 4

  • Stock Market Closed -- July 4 holiday

____

Friday, June 5

  • No major reports scheduled

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