• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Consumer Discretionary

The Week Ahead: Too Much Hoopla Around the Dow

This index's record high is of little importance.
By CHRIS VERSACE
May 11, 2014 | 08:00 PM EDT
Stocks quotes in this article: TOL, RYL, KBH, M, FOSL, KATE, JCP, JWN, WMT, KSS, SHLD, AMAT, DE, GOGO, T

On Friday afternoon I received an email alert reminding me the Dow Jones Industrial Average closed at a record high of 16,583.34, slightly above its April 30 record finish of 16,580.84. Maybe it's the analyst in me, but when I hear such the news, I don't get caught up in the euphoria. Instead I tend to think, "What's next?" For the Dow in particular, this is a basket of 30 stocks -- and I believe, along with most other professional money managers, that it is among the less important figures to watch. My preference is for the S&P 500, which better reflects the overall stock market, and is the index for which we have earnings estimates and other metrics.

The other way to view the indices is on a year-to-date basis. From this perspective, the Dow has been rather flat so far this year, while the S&P 500 is up 1.6% and the Nasdaq Composite Index is down 2.5%. Yes, 2014 is certainly shaping up to be a stock-picker's market.

On the economic front this week, retail sales and inflation data are set for release, along with other indicators on the health of the manufacturing economy and the housing industry. Yes, keeping a bead on the consumer is key, but we already have a number of metrics that point to a pick-up in the industrial and manufacturing economy.

To me, that means the two key pieces of data will be in the inflation and housing data. Given comments from such companies as Sonic (SONC), Chipotle (CMG), and considering also the year-over-year rise in gas prices, the line items to watch in the April consumer and producer price indices will be food and energy. Remember that, for some bizarre reason, these two components are excluded from the core inflation calculation even though they impact consumers in a meaningful way.

As for housing, on Thursday and Friday we're due to get the National Association of Home Builders (NAHB) Housing Market Index for May and April housing starts. Comments from Realogy and others suggest a lack of homes for sale at affordable prices, and at least some of that can be attributed to weaker-than-expected housing starts in early 2014. As the winter weather has cleared out, April's read on single-family housing starts will be the number to watch. As I shared with TheStreetTV's Brittany Umar, that report will be put-up-or-shut-up time for such homebuilders as Toll Brothers (TOL), Ryland (RYL) and KB Home (KBH).

Turning to earnings, I am rather happy to see the pace slow down after several weeks of more than 1,000 reports. Per FactSet, 454 of the S&P 500 companies have reported their quarterly results, and the blended earnings-growth rate for the March quarter is clocking in near 2.2%. Back on March 31, the expectations was for first-quarter earnings to decline 1.3% year over year.

That's the good news. The bad news is 62 companies have issued negative guidance for the current quarter -- that is, expecting numbers below analyst targets -- as compared with the 26 issuing positive guidance. Still, given that 75% of companies in the S&P 500 that have beaten the mean earnings estimate, that ratio of negative to positive could have been impacted by companies resetting the bar or sandbagging expectations.

In terms of company earnings to watch this week, we will start to hear from the retailers: Macy's (M), Fossil (FOSL), Kate Spade (KATE), J.C. Penney (JCP), Nordstrom (JWN), Wal-Mart (WMT) and Kohl's (KSS) are all set to report this week. There has been much talk about store closings by the likes of Sears (SHLD) and Penney, so you'd do well to pay attention to how those plans are progressing at Penney.

Applied Materials (AMAT) is also due to report this week, bringing semiconductor capital equipment to the forefront, and Deere (DE) is set to put the spotlight on agricultural equipment. One other earnings report to watch will be that of Gogo (GOGO), given the recent news that AT&T (T) will look to bring connectivity to air travel.

Here's a more comprehensive listing of what you can expect in the week ahead:

_________________

Economic Calendar

Monday, May 12

  • Treasury Budget (April)

____

Tuesday, May 13

  • Retail Sales (April)
  • Import and Export Prices (April)
  • Business Inventories (March)

____

Wednesday, May 14

  • Mortgage Bankers Association (MBA) Mortgage Index (Weekly)
  • Producer Price Index (PPI) (April)
  • Crude Oil Inventories (Weekly)

____

Thursday, May 15

  • Initial and Continuing Jobless Claims (Weekly)
  • Consumer Price Index (CPI) (April)
  • Empire Manufacturing Index (May)
  • Industrial Production and Capacity Utilization (April)
  • Philadelphia Federal Reserve Index (May)
  • National Association of Home Builders (NAHB) Housing Market Index (May)
  • Natural Gas Inventories (Weekly)

____

Friday, May 16

  • Housing Starts and Building Permits (April)
  • Michigan Sentiment Index (May)

________________

Earnings Calendar

Monday, May 12

  • Continental Building Products (CBPX)
  • DTS Inc. (DTSI)
  • Everyday Health (EVDY)
  • Gogo Inc. (GOGO)
  • Harvest Natural Resources (HNR)
  • Lifeway Foods (LWAY)
  • McKesson Corp. (MCK)
  • NII Holdings (NIHD)
  • ParkerVision (PRKR)
  • Rackspace Hosting (RAX)
  • Elizabeth Arden (RDEN)
  • Rick's Cabaret International (RICK)
  • Tecumseh Products (TECU)

____

Tuesday, May 13

  • American Residential Properties (ARPI)
  • CTI Industries (CTIB)
  • Convergys Corp. (CVG)
  • Consolidated Water (CWCO)
  • Electro Scientific Industries (ESIO)
  • Elbit Systems (ESLT)
  • Fossil Inc. (FOSL)
  • Intelli-Check (IDN)
  • Trend Micro (TMICY)
  • Take-Two Interactive (TTWO)
  • YuMe, Inc. (YUME)

____

Wednesday, May 14

  • Agilent Technologies (A)
  • Acxiom Corp. (ACXM)
  • Coty Inc. (COTY)
  • Deere & Co. (DE)
  • Kate Spade & Co. (KATE)
  • Macy's Inc. (M)
  • Opower (OPWR)
  • On Track Innovations (OTIV)
  • Pinnacle Foods (PF)
  • SeaWorld Entertainment (SEAS)
  • SodaStream International (SODA)
  • Vimpel Communications (VIP)

____

Thursday, May 15

  • Advance Auto Parts (AAP)
  • Authentidate Holding (ADAT)
  • Autodesk, Inc. (ADSK)
  • Applied Materials (AMAT)
  • Eagle Materials (EXP)
  • Jack in the Box (JACK)
  • J.C. Penney Company (JCP)
  • Nordstrom Inc. (JWN)
  • Kohl's Corp. (KSS)
  • LGI Homes (LGIH)
  • RE/MAX Holdings (RMAX)
  • Tower Semiconductor (TSEM)
  • Wal-Mart Stores (WMT)

____

Friday, May 16

  • Canadian Solar (CSIQ)
  • Gas Natural (EGAS)
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Versace had no positions in the stocks mentioned.

TAGS: Investing | U.S. Equity | Consumer Discretionary | Economic Data | Stocks

More from Consumer Discretionary

Logitech Could Decline Further From Here

Bruce Kamich
Jan 20, 2021 8:50 AM EST

A stock that declines in the face of what appears to be bullish news tells us something.

Boot Barn Gets a Quant Upgrade: Do the Charts Fit?

Bruce Kamich
Jan 19, 2021 1:53 PM EST

Here's our latest analysis and trading strategy for the shares.

Signet Jewelers May Retest the Breakout From Its Base Pattern

Bruce Kamich
Jan 15, 2021 8:09 AM EST

There is a risk of a pullback to the top of the base pattern or down to the $30 area.

Norwegian Cruise Lines Fights to Survive

Jonathan Heller
Jan 13, 2021 11:00 AM EST

The markets appear to be looking forward for the cruise industry.

Coca-Cola Could Turn Lower as the Bullish Fizz Is Escaping

Bruce Kamich
Jan 6, 2021 9:15 AM EST

Price momentum often weakens before a turn lower.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 08:07 AM EST GARY BERMAN

    Wednesday Morning Fibocall for 1/20/2021

    SPX (Long-Term View) The 1/8/21 high @ 3826.69 i...
  • 11:09 AM EST GARY BERMAN

    Is Copper About to Turn to Rust?

    Below is a very long-term copper chart.  As you...
  • 08:02 AM EST GARY BERMAN

    Tuesday Morning Fibocall for for 1/19/2021

    SPX (Long-Term View) The 1/8/21 high @ 3826.69 i...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login