Week Ahead: No Hiding Place For Stocks

Apr 13 2014, 2:27pm CDT | by

Under-pressure stocks have no place to hide in the coming days, despite the possibility of lighter trading due to Passover beginning on Monday and U.S. stock and bond markets closing for Good Friday in the Easter week ahead.

The next four days brings an onslaught of earnings from more than 50 major companies in the S&P 500, speeches by Federal Reserve chair Janet Yellen, and a slew of economic indicators in the United States and China.

Also planned in the coming week are a number of high-profile initial public offerings (IPOs) of stock that will test the market’s appetite amid the rout of the techs.

Traders already twitchy cannot afford to switch off amid this flurry of economic and corporate news before the Easter break.

Investors may seek the perceived safety of blue chip shares as the rout in so-called “momentum” stocks in tech and biotech continues.

The technology-heavy Nasdaq Composite Index is down almost 5 percent for the month, the S&P 500 is down 3 percent, and the Dow Jones index is down 2.6 percent.

The real bloodbath has been in biotech shares. According to Reuters data, the Nasdaq biotechnology index has fallen 21 percent from its record high in February. The price-to-earnings ratio on this index is 34.4, compared to the forward price-to-earnings ratio for the S&P 500 of 14.9 — so the pain in these stocks may not be over.

The earnings news this coming week may not bring too much respite.

Analysts say that in the first quarter, growth in profits for S&P 500 companies is expected to have increased just under 1 percent from a year ago, way down from a January forecasts of more than 6 percent growth.

Only the brave bet against the U.S. stock markets, but the next few days will certainly test optimism.

Monday brings updates on U.S. retail sales for March, U.S. business inventories for February and earnings from Citigroup.

On Tuesday, Fed chair Janet Yellen is expected to speak by video to a conference in Atlanta in Georgia, the Consumer Price Index is due for release, investment bank Moelis & Co launches its IPO, and companies reporting earnings include Yahoo!, Intel, Johnson & Johnson and Coca-Cola.

Wednesday is a huge day for economic and corporate news in the United States and China. Data on China’s first quarter growth and March industrial production, investment and retail sales will be released as traders watch with anxiety.

Wednesday also sees data on U.S. housing starts, building permits and industrial production for March, the release of the Federal Reserve’s Beige Book report on economic conditions in its 12 districts, and a speech by Fed chair Janet Yellen in New York.

Yellen’s recent hint that interest rates could rise back toward normal levels a little bit faster than expected put many investors and traders on edge and they will watch her language closely this coming week.

Further, Wednesday also brings expected IPOs from travel software firm Sabre and Chinese microblogging company Weibo and earnings from American Express, IBM, Bank of America and Google.

Thursday brings big earnings news from Goldman Sachs, BlackRock, Morgan Stanley, General Electric, PepsiCo and UnitedHealth, as well as updates on U.S. initial weekly jobless claims and the influential Philadelphia Fed survey./>/>

It promises to be yet another week where anything could happen. Hang on to your hats.

 
 

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