Last week brought a plethora of information as nearly 500 companies not only reported their December quarter results, but also issued their near-term forecasts. As tends to be the case, it was a smorgasbord of data with views that were positive, negative and conflicting as well. The net result for the market was a positive move in the S&P 500, which closed the week at 1502.96 -- up 5.4% year to date. That marks not only one of the strongest Januaries in some time, but also the first time the index has closed above 1500 since late 2007.
While I'm more of a fundamentalist than a technical analyst, I'd be remiss if I didn't at least take a cursory look at the S&P 500 chart. The daily chart suggests it has entered overbought territory.
By comparison, the weekly view of the S&P 500 shows the shares have yet to reach breach the overbought line.
Taken together, the two images suggest that investors be careful near-term, particularly given the pending debt-ceiling conversation, which could result in higher taxes and potentially put a damper on consumer and capital spending.
Looking back over the fourth-quarter earnings released thus far, a few key themes have emerged. First, while the domestic market has been OK, we've gotten solid confirmation on the rebound in China and the emerging markets from a number of companies, including General Electric (GE), Schlumberger (SLB), IBM (IBM), Starbucks (SBUX) and others. We'll get another view on that rebound this coming Friday when we'll see latest snapshots of purchasing managers' indices from both Markit Economics and HSBC on China, Europe, the U.S. and other markets.
Food prices have been an issue due to the summer drought and the weak 2012 harvest that resulted -- which will continue to be a thorn in the consumer's wallet, as well as to the restaurant industry. Companies such as Chipotle (CMG) and Brinker International (EAT) have already warned that rising food prices will hit margins in 2013. In recent weeks we've seen prices at the gas pump start to climb higher, and should the global economy rebound catch, odds are that gas prices will climb further. Taken together, it's hard to see a vibrant consumer emerge in the near term. Imagine what their spending mood will be depending on the debt-ceiling outcome.
Domestic data to watch this week include Monday's January durable-orders report. As a reminder, core capital-goods orders -- which exclude non-defense and non-aircraft orders -- were solid in November and December, owing in part to the rebounding housing and automotive markets. In my view, given the recent weakness in the Empire State Manufacturing and Philadelphia Federal Reserve Indices, investors will be quite focused on this report.
Another closely watched report be will be the January employment report due Friday. Current expectations call for the addition of 180,000 nonfarm payrolls this month, as well as a modest dip in the unemployment rate to 7.7%. Those figures compare with 155,000 and 7.8% for December. As usual, ahead of the Bureau of Labor Statistics data, we'll see several other job-creation perspectives -- from ADP, Intuit and Challenger Job Cuts Report.
Meanwhile, if you thought that all of the earnings fun was over after those 500 companies reported their results, you'd be dead wrong. More than another 560 companies are scheduled to issue their numbers this week, and nearly 450 will be holding conference calls and webcasts to discuss their results. All in all, the coming five days will be far more frenetic in terms of activity than last week. Somehow, though, I doubt we'll see anything as entertaining as the exchange between investors Carl Icahn and Bill Ackerman that took place on CNBC this past Friday.
As you'll see in the list below, we're due to see results from a smorgasbord of key technology companies -- Qualcomm (QCOM), Facebook (FB), Broadcom (BRCM), and Cavium Networks (CAVM). Also set to report are such homebuilders as MDC Holdings (MDC), M/I Homes (MHO), Pulte Homes (PHM), as well as consumer companies Hershey (HSY), Harley-Davidson (HOG), Under Armour (UA) and Dunkin' Brands (DNKN), to name a few. There's also Caterpillar (CAT), Dow Chemical (DOW), Pentair (PNR) and Eastman Chemical (EMN).
In other words, the combination of earnings and economic releases will be hurling an array of data at us. My advice is to buckle up for the ride on the one hand, while also ensuring that you push back from your desk and look for confirmation of overarching themes. After all, perspective is the friend of the successful investor; just be sure to let the data talk to you, rather than you superimposing your view on the data.
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Economic Data
Monday, Jan. 28
- Durable Orders (December)
- Pending Home Sales (December)
_____
Tuesday, Jan. 29
- Case-Shiller 20-City Index (November)
- Consumer Confidence (January)
_____
Wednesday, Jan. 30
- Mortgage Bankers Association (MBA) Mortgage Index (Weekly)
- ADP Employment Report (January)
- Gross Domestic Product -- Advanced Reading (4Q 2012)
- Federal Open Market Committee Interest-Rate Decision (January)
_____
Thursday, Jan. 31
- Initial and Continuing Jobless Claims (Weekly)
- Challenger Job Cuts Report (January)
- Personal Income & Spending (December)
- Employment Cost Index (4Q 2012)
- Chicago Purchasing Managers Index (PMI) (January)
_____
Friday, Feb. 1
- HSBC Brazil Manufacturing PMI (January)
- HSBC China Manufacturing PMI (January)
- Markit Eurozone Manufacturing PMI (January)
- Markit U.S. Manufacturing PMI (January)
- Nonfarm Payrolls and Employment Report (January)
- Michigan Sentiment Index - Final (January)
- Institute for Supply Management Manufacturing Index (January)
- Construction Spending (December)
- Auto and Truck Sales (January)
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Corporate Earnings
Monday, Jan. 28
- BMC Software (BMC)
- Caterpillar
- Delta Apparel (DLA)
- VMware (WMW)
- Werner Enterprises (WERN)
- Yahoo! (YHOO)
_____
Tuesday, Jan. 29
- AK Steel (AKS)
- Amazon (AMZN)
- Broadcom
- Crane (CR)
- DR Horton (DHI)
- Dolby (DLB)
- Ford (F)
- Corning (GLW)
- Peabody Energy (BTU)
- Harley-Davidson
- International Paper (IP)
- Illinois Tool Works (ITW)
- Pfizer (PFE)
- Pentair
_____
Wednesday, Jan. 30
- ADT (ADT)
- Boeing (BA)
- CEVA (CEVA)
- Citrix Systems (CTXS)
- Callaway Golf (ELY)
- Piper Jaffray (PJC)
- Qualcomm
- Northrop Grumman (NOC)
- Ryland (RYL)
- Skyworks Solutions (SWKS)
- Tractor Supply (TSCO)
_____
Thursday, Jan. 31
- Ameriprise Financial (AMP)
- AutoNation (AN)
- Ball (BLL)
- Brooks Automation (BRKS)
- Cavium Networks
- Colgate-Palmolive (CL)
- Dunkin' Brands
- Dow Chemical
- Fortune Brands Home & Security (FBHS)
- hhgress (HGG)
- Hershey
- MDC
- M/I Homes
- Meritage Homes (MTH)
- Altria (MO)
- NXP Semiconductors (NXPI)
- Paccar (PCAR)
- Pulte Homes
- Potash (POT)
- Regis (RGS)
- Sherwin-Williams (SHW)
- Under Armour
_____
Friday, Feb. 1
