There are a couple of important economic reports and a few significant corporate earnings reports scheduled for release this week. Economic reports this week include ISM Non-manufacturing, Initial Jobless Claims, Consumer Credit and Wholesale Inventories. ISM Non-manufacturing and Initial Jobless Claims both have market-moving potential.
Accenture(ACN), Alcoa(AA), Genentech(DNA), Yahoo!(YHOO), Schnitzer Steel(SCHN), Abbott Labs(ABT), PPG Industries(PPG) and General Electric(GE) are some of the more important companies that release quarterly earnings this week. There are also a few other events that have market-moving potential. The Fed's Broaddus speaking on the U.S. economy to tax administrators, the U.S. Oil and Gas Investment Symposium and the Fed's Hoenig speaking on monetary policy could also impact trading this week.
Bottom Line: I expect U.S. stocks to rise this week in a delayed reaction to falling interest rates, declining energy prices, improvements in Iraq, increasing consumer confidence and moderating inflation fears. I am not concerned about a significant slowdown in economic growth. Exceptionally strong home sales and summer travel may be cannibalizing auto and retail sales to an extent. As well, corporate spending should accelerate in the second half of the year as companies flush with cash upgrade operations. Historically, stocks perform the best when economic growth and inflation are moderate rather than high. My short-term trading indicators are giving mixed signals and the Portfolio is 100% net long heading into the week.
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