With a heavy calendar for economic news slated for this week, along with a new batch of earnings reports, the markets may re-test the near-term bottoms they put in last week. The economic calendar led off with the new home sales figures today, bad news which continued for the battered housing industry. The numbers showed the biggest drop in new home sales yet. Tomorrow, durable goods orders and the one week same store sales figures will give a one-two punch as far as how both businesses and consumers are reacting to the economic roiling of the last couple weeks.
The Federal Reserve meeting gets underway tomorrow, with more rate-cutting expected, though observers have dropped their predictions of another 75-point basis cut down to perhaps 25, some even suggesting there won’t be a rate cut at all.
On the heels of some important earnings’ reports last week, which included computer-maker Apple (NYSE: AAPL), software giant Microsoft (NYSE: MSFT) and big pharma’s Merck (NYSE: MRK), along with McDonald’s (NYSE: MCD) this morning before the bell, these leading companies are posting good numbers but the market has looked for more. Investors showed concern with Apple’s potentially slightly lowered earnings expectations for the coming year. Though the numbers looked strong, the stock sold off on these concerns and was down last week in trading. Microsoft’s surprise numbers gleaned a pop from share buyers, but by a day later on Friday shares were flat in trading. Investors in pharmaceutical stocks were concerned with the scanty prospects in the product pipeline, so Merck’s numbers failed to lift the stock, as its earnings report on Friday was greeted with a loss of 1.77 points, closing at 47.79. After hours the stock continued to fall.
Deeper concerns surfaced over the drug Vyotrin, which is a joint product of Merck and Schering-Plough (NYSE: SGP). Whether this will be a long term concern by investors when looking at pharmaceutical stocks is yet unclear. McDonald’s posted slowing sales and was greeted down over three points in mid-afternoon trading.
Earnings reports this week are expected from insurer Allstate (NYSE: ALL) on Tuesday, Yahoo (NASDAQ: YHOO) also on Tuesday, Boeing (NYSE;BA), Eastman- Kodak (NYSE: EK) and Starbucks (NASDAQ: SBUX) on Wednesday, Mastercard (NYSE: MA) and Procter & Gamble (NYSE: PG) on Thursday, with Exxon-Mobil (NYSE: XOM) on rounding out the week on Friday.
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