In case you happened to be under a rock last week, several big events took place that shaped the market, and they will no doubt impact trade in the coming days as well.
First off, the Organisation for Economic Co-operation and Development (OECD) cut its global growth outlook. Second, the Federal Reserve kept its "considerable time" statement -- regarding low interest rates on U.S. Treasuries -- in the most recent Federal Open Market Committee (FOMC) policy statement. Then there was Scottish voters' decision to remain part of the U.K., and the European Central Bank's (ECB) first targeted long-term refinancing operation (TLTRO). Alibaba's (BABA) had its initial public offering Friday and, of course, Apple's (AAPL) new iPhone 6 hit store shelves.
Thanks in large part to the net effect of those events, the S&P 500 notched another 1.25% climb last week, bringing the index's year-to-date gain to 8.8%. The Dow Jones Industrial Average edged up 13.75 points to a new all-time high of 17,279.74 -- but, candidly, we think this is a far less meaningful metric when it comes to tracking the overall stock market.
In any event, with only a few trading days left in the current quarter, we will soon be hip deep in earnings. In our view, that will light the fuse on the typical breakneck pace of the fourth quarter -- its earnings, its holidays, the related shopping and the concurrent need to close deals before the close of the federal government's fiscal year and of 2014. We realize this may sound a bit dramatic, but we also realize the impact that several holidays have on fourth-quarter activity. When reflecting on the year-end push, we can't rule out window dressing by mutual-fund managers that aim to shine up lagging performance.
As for the U.S. consumer, we do remain concerned. After all, the Census Bureau's latest median income figure -- $51,939 -- remains 8% below 2007 levels. That said, we have to acknowledge the potential psychological benefit to be had thanks to the continued drip lower in gas prices at the pump, which stood at an average of $3.485 per gallon as of Sept. 15, per the Energy Information Administration. That's down 4% year over year, and it's 8% off the 2014 high that was hit this past April.
Tempering this, however, is a study from CardHub that shows new U.S. credit-card debt hit a post-recession high of $28.2 billion in the second quarter. Per the study, consumers have charged 86% more dollars in the second quarter, and the average household credit-card debt total is near $6,800. While this is still lower than the $8,431 average seen at the end of 2008, CardHub expects average household credit-card debt to reach $7,000 by the end of 2014. This has us thinking that holiday shopping may not be as rosy as some of the more optimistic forecasts suggest.
Turning to the week ahead, we have several flash PMI readings on tap, including from China and the eurozone -- regions that have once again raised concerns over global growth. We suspect these readings will be the highlight of the week. In our view, if these regions continue to slide further over the coming months, there may be even more talk of stimulative action -- which would likely prop up those overseas stock markets, much as it has done in the U.S. Not only that, but it could also give the Fed more cover to hold off raising interest rates.
Other economic data to watch this week include August existing-home sales and durable orders. Remember that the latter statistic tends to be swayed by aircraft orders. In light of this, you should zero in on the core-capital-goods line of the report for a better sense of the true tone of the economy.
With regard to corporate earnings this week, it's set to be a mishmash of companies, but a few are worth noting. Nike (NKE) and BlackBerry (BBRY) will be the highlights, and so will KB Home (KBH) following Lennar's (LEN) strong report last week. You'd also do well to keep tabs on AutoZone (AZO), CarMax (KMX) and Micron (MU). Under the "wondering what they will say about Apple Pay" category -- and how it impacts business -- little-followed USA Technology (USAT) could be of some interest.
Below is a more detailed look at what's coming at you in the week ahead. Be sure to check back midweek for The Corner of Wall & Main, in which we will dish on the first half of the trading week and other key matters and thoughts, as well as how to play it all.
_________________
Economic Calendar
Monday, Sept. 22
- Existing Home Sales (August)
____
Tuesday, Sept. 23
- HSBC Flash China Manufacturing Purchasing Managers Index (PMI)
- Markit Flash Eurozone Composite PMI
- Markit Flash U.S. Manufacturing PMI
- Federal Housing Finance Agency (FHFA) Housing Price Index (July)
____
Wednesday, Sept. 24
- Mortgage Bankers Association (MBA) Mortgage Index (Weekly)
- New Home Sales (August)
- Crude Inventories (Weekly)
____
Thursday, Sept. 25
- Initial and Continuing Jobless Claims (Weekly)
- Durable Orders (August)
- Markit Flash U.S. Services PMI
- Natural Gas Inventories (Weekly)
____
Friday, Sept. 26
- Gross Domestic Product (GDP) -- Third Estimate (Second Quarter of 2014)
- University of Michigan Sentiment Index -- Final (September)
________________
Earnings Calendar
Monday, Sept. 22
- Alco Stores (ALCS)
- AutoZone Inc. (AZO)
- Natuzzi Spa (NTZ)
____
Tuesday, Sept. 23
- Bed Bath & Beyond (BBBY)
- Carnival Corp. (CCL)
- CarMax Group (KMX)
- USA Technology (USAT)
____
Wednesday, Sept. 24
- Accenture Plc. (CAN)
- Jabil Circuit (JBL)
- KB Home (KBH)
- Vail Resorts (MTN)
- Paychex Inc. (PAYX)
- Steelcase Inc. (SCS)
____
Thursday, Sept. 25
- Diamond Foods (DIA)
- Micron Technology (MU)
- Nike (NKE)
- Progress Software (PRGS)
- Scholastic Corp. (SCHL)
____
Friday, Sept. 26
- BlackBerry Ltd. (BBRY)
- Finish Line (FINL)
