CORRECTED-What to Watch in the Week Ahead and on Monday, Oct. 20
WEEK AHEAD Investors are hoping for a bit more in the way of calm next week, though the recent volatility isn't likely to abate entirely, particularly with equity options expiring at the end of the week. The stock market's selling has at least reached a plateau, however temporarily, and investors will get a better sense of whether the earnings reports will underscore fears that had been out there or whether they will assuage worried folks who believe the underlying economic picture hasn't changed. The bond market's scare period may also be over but elevated repo rates of late still suggest a lot of dealers trying to unload Treasuries, and the dollar's volatility should also recede.
As earnings season kicks into gear, a slew of Dow 30 companies are expected to report quarterly results. On Tuesday, The Coca-Cola Co, Travelers Companies Inc, United Technologies Corp and Verizon Communications Inc are scheduled to report third-quarter results. Boeing Co and AT&T Inc report on Wednesday and 3M Co, Caterpillar Inc and Microsoft Corp report on Thursday. Procter & Gamble Co rounds off the week with its first-quarter report on Friday. U.S. airlines are expected to report healthy third-quarter profits as jet fuel costs keep falling, even though their stocks have plunged on concerns that Ebola will discourage travel, analysts said. American Airlines, Southwest Airlines and United Airlines are scheduled to post results on Thursday.
General Motors Co reports third-quarter earnings on Wednesday. Investors will watch for progress of European recovery and the Opel brand, whether LATAM will continue to weigh on its earnings and how the recall of ignition switch vehicles may hurt the Detroit-based company's bottom line. On Friday, Ford Motor Co reports its quarterly earnings, the first quarter under its new CEO, Mark Fields. Investors will be looking for any updates on the rollout of the aluminum-intensive, lighter-weight Ford F-150 pickup truck, which is the automaker's cash cow. The National Association of Realtors releases existing home sales for September on Tuesday. Analysts forecast the home resales number to increase 1 percent to 5.1 million. Meanwhile, the Labor Department issues the Consumer Price Index for September on Wednesday. U.S. consumer prices fell for the first time in nearly 18 months in August. Separately, the U.S. Department of Commerce issues new home sales numbers on Friday. Chemical company Dow Chemical Co is expected to report a higher third-quarter profit on Wednesday, helped by robust sales of farm products. Investors will be looking for details on a new herbicide that received a final approval from the Environmental Protection Agency last week. Investors will also be looking for updates on the company's $6 billion asset sale program. The Federal Reserve Board holds an open meeting on Wednesday to discuss a final rulemaking requiring sponsors of securitization transactions to retain risk in those transactions. Yahoo Chief Executive Marissa Mayer's honeymoon is officially over, with activist investor Starboard recently demanding that the company merge with AOL, cut costs and quickly find a way to monetize its valuable Asian assets and return the cash to shareholders. Two years into her tenure, Mayer has yet to deliver any boost to the company's stagnant revenue. When Yahoo reports its third-quarter earnings on Tuesday, Mayer will be under pressure to show investors that she has a viable plan to turn the company around and for how to spend billions of dollars in proceeds from Alibaba's IPO, otherwise more investors may join Starboard in calling for change. Consumer discretionary names Amazon.com Inc and Comcast Corp are scheduled to release third-quarter earnings before the bell on Thursday. Amazon.com has forecast an operating loss of between $810 million and $410 million for the third quarter. High-speed internet business and improved profitability at NBC Universal helped Comcast beat estimates during the second quarter. Auto supplier Delphi Automotive is likely to benefit from the growth in global vehicle demand and its planned restructuring in South America, where revenue fell 24 percent in the last quarter. Delphi could also benefit from demand in developing countries such as India and China, where it has a sizable presence. Lockheed Martin Corp, the global security and aerospace company, releases third-quarter earnings before the bell on Tuesday. U.S. weapons maker Northrop Grumman Corp posts third-quarter results on Wednesday, while another U.S. weapons maker, Raytheon Co, is scheduled to report third-quarter earnings on Thursday.
Lear Corp, a maker of auto seats and electrical power systems, is expected to report better-than-expected quarterly results on Friday as sales of new cars rose during the quarter. Analysts expect Lear's margins to rise as sales of premium vehicles increase. Investors will be looking out for a forecast on the electrical power systems business as the company had said last quarter that it was expected to slip slightly in the second half of the year. Swiss bank Credit Suisse, reporting third-quarter results on Thursday, said in September that revenue at its investment bank rose in the first two months of the quarter compared with the same period a year ago, but that volatility which typically mars the quarter was more pronounced. The bank also signaled that following the bank's guilty plea and more than $2.5 billion penalty in May to a U.S. criminal charge for helping Americans evade taxes, the U.S. government's examination of financial crisis-era mortgage abuses was now its biggest remaining legal worry. Carlos Slim's America Movil, reporting third-quarter results on Thursday, is in the midst of a regulatory crackdown in its home market of Mexico. In response, it is trying to sell assets to cut its share there, spin off thousands of telecom towers and gain ground in its second-biggest market, Brazil. New rules that force it to share its infrastructure, stop national roaming charges and slash rates for competitors to use its network are expected to weigh on its results. But continued growth in Brazil, where America Movil has said it will look at joining competitor Oi in a bid to buy rival Tim, could help to offset that. United Technologies, one of the rougher stock performers over the past few months among diverse U.S. industrial manufacturers, will try to assure investors about its growth prospects when it reports third-quarter results on Tuesday. The major supplier to the aerospace and commercial building industries faces questions about growth in China, a large market for its Otis elevators unit, and how quickly its Pratt & Whitney jet engine division can profit from its new engine for commercial jets. Indianapolis drugmaker Eli Lilly is expected to report sharply lower third-quarter earnings on Thursday, hurt by generic competition for its Cymbalta depression treatment. Analysts will be far more focused, however, on updates from the company about studies of its promising experimental treatments for cancer, Alzheimer's disease and diabetes. Fourth-largest U.S. oil and gas company Occidental Petroleum is expected to report a lower quarterly profit on Thursday, hurt by a steep fall in oil prices. The company, which has been spinning off its overseas assets to focus on the Texas Permian Basin, is looking to sell its North Dakota and Williston assets, Bloomberg reported this month citing sources. The company recently announced the board's approval for the spin off of its California assets. Investors will be looking for comments on the stake sale and weak oil prices. Diamond Offshore is expected to post a much lower profit on Thursday, hurt by weak demand and a flood of new vessels that weighed on day rates. Third-quarter profit could, however, trump analysts' expectations mainly due to the company's cost-cutting efforts. On the same day, onshore driller Patterson UTI Energy is expected to post a jump in quarterly profit as oil and gas producers continue to shift their investments toward North American shale fields. Oilfield services company Nabors Industries Ltd is expected to report a jump in third-quarter profit on Tuesday as spending in North American shale fields proves to be resilient despite weak crude prices. Nabors is expected to benefit from increased drilling activity in the Texas Permian Basin and North Dakota's Bakken shale field. Investors will look for any forecast or commentary on demand for the company's services, following a steep slide in global crude prices. GlaxoSmithKline Plc reports third-quarter earnings on Wednesday. Investors will focus on efforts to regain sales momentum after several quarters of disappointing growth, particularly in the United States. On Friday, Wall Street expects Bristol-Myers Squibb to report lower earnings and sales, hurt by sharply higher research costs and falling sales of treatments for HIV. Investors may want greater clarity on the company's experimental treatments for cancer that work by spurring the immune system, now that rival Merck is closing in on the company's earlier lead in the program. Abbott Laboratories is expected to report moderately higher third-quarter earnings on Wednesday, fueled by a recovery in Asian sales of its infant formula brands, which were recalled last year due to contamination concerns. The company may provide more details about its plans to sell its generics business in developed markets outside the United States to Mylan Inc. Boston Scientific Corporation, the medical equipment maker that has struggled to produce steady earnings, is expected to double its third-quarter profit when it reports on Wednesday. A negative review by an FDA advisory committee could overshadow the earnings as investors listen for the company's next steps on its new watchman device to reduce stroke. Kimberly Clark Corp, the maker of Kleenex tissues, will report third-quarter results on Tuesday as U.S. household product makers struggle with a stronger dollar, tough competition and choppy growth in developed markets. Investors will look for the impact of Ebola on the company's forecast. They will also look for updates on its planned spinoff of its healthcare business. Profit for the third quarter will likely come in slightly lower than expectations, according to Starmine. Ingersoll-Rand, the maker of heating, ventilation and air conditioning equipment, is expected to report better-than-expected third-quarter results on Wednesday as sales of its Thermo King truck refrigeration units are expected to increase. Investors will be looking for information on how the residential HVAC business performed in the quarter and outlook for the next quarter. On Wednesday, Xerox Inc is expected to report a smaller-than-expected third-quarter profit, according to StarMine data. The company, which has a strong presence in the Asia-Pacific region, has been experiencing lower demand in its printing business and analysts don't expect the situation to improve in the near term. Illinois Tool Works Inc, a maker of vehicle parts and food service equipment, is expected to report a third-quarter profit on Tuesday, bolstered by a surging U.S. auto market. ITW's U.S. sales accounted for 42 percent of its operating revenue in 2013 and the company has experienced steady demand across most of its markets and geographies. The company sold its industrial packaging unit this year, which could improve its organic revenue growth, analysts say. Investors will look for comments on any possible divestitures as the company continues to try and shed its relatively less profitable businesses. Advertising company Omnicom Group is likely to report a third-quarter profit above analysts' estimates on Tuesday, according to StarMine, helped by higher ad spending in the United States. In July, the company said it was sticking with its annual organic revenue growth target, showing little effect from its aborted $35 billion merger with France's Publicis Group. Investors will look forward to updates on full-year forecast and management commentary on ad spending trends. On Wednesday, Interpublic Group is expected to report third-quarter revenue in line with analysts' expectations, according to Thomson Reuters StarMine. Investors will look for comments on recent speculation about a sale of the company after activist hedge fund Elliot Management disclosed a 6.7 percent stake in the company. Biogen Idec Inc is expected to report much higher third-quarter revenue and profit on Wednesday as sales of its new oral multiple sclerosis drug Tecfidera soar, while older MS treatments continue to contribute to the bottom line. Investors will look for updates on the launch of Biogen's new hemophilia drugs and on its pipeline of medicines in development. On Tuesday, Intuitive Surgical is expected to report lower third-quarter profit as constrained hospital spending continues to hurt sales of its expensive da Vinci surgical robot systems. Investors will be looking for any sign of improvement from the once fast-growing company as well as updated revenue and procedure forecasts. On Tuesday, credit card issuer Discover Financial Services' third-quarter results are expected to top estimates, according to StarMine data. Discover, like Capital One and AmEx, is also expected to benefit from lower loan-loss reserves and a rise in U.S. consumer spending. PulteGroup, which this year lost its position as the second-largest U.S. homebuilder to Lennar Corp, has been hurt by a choppy recovery in the U.S. housing market. PulteGroup has so far chosen to raise prices to drive revenue, even at the cost of orders. However, with home prices reaching a peak, investors will be keen to see if PulteGroup tweaks its strategy in the new year, when the company reports third-quarter results on Thursday. Data storage products maker EMC Corp is expected to report a better-than-expected profit for the third quarter on Wednesday, according to StarMine data, and is expected to benefit from flash storage products sales. The company, whose merger talks with Hewlett-Packard fell through recently, was also urged by activist investor Elliott to spin off its VMware virtualization software unit earlier this month. Car retailer Asbury Automotive Group Inc is expected to report strong third-quarter results as new car sales have picked up pace. New car sales in the third quarter were the best for the industry since 2006. While Asbury's new car sales contribute about 55 percent of its revenues, margins at its used cars business are likely to be weak due to an increase in the supply of used cars that has pushed down prices. Investment bank and asset manager Lazard Ltd will release results for the third quarter on Thursday. Lazard has benefited from the big uptick in merger activity, as well as inflows of assets into investment funds. Analysts expect Lazard to report earnings of 64 cents per share, up from 46 cents per share a year earlier. Property and casualty insurer Chubb Corp's results on Thursday are expected to beat estimates, according to StarMine. Chubb is likely to benefit from low catastrophe losses in the quarter. Potash Corp of Saskatchewan, the biggest global fertilizer company, reports third-quarter results on Thursday. Potash prices have recovered this year from multi-year lows, and profits are expected to be similar to year-ago levels. CEO Jochen Tilk is still only a few months into the job, and any comments from him on how he will lead the company will be of interest. Online review website Yelp Inc is expected to report third-quarter results above analysts' expectations on Wednesday, according to StarMine. Yelp has devised advertising deals to lure more businesses to its site and launched new features to draw more users. Analysts speculate that the company's cost-per-click advertising model will help boost revenue during the quarter. Network gear maker Juniper Networks Inc is expected to report third-quarter earnings below analysts' average estimate on Thursday, according to StarMine. Juniper cut its revenue estimate for the quarter, citing lower-than-anticipated demand from service providers, particularly in the United States. Investors will look for guidance on when it expects business from service providers, who contribute more than two-thirds of its revenue, to improve. Any plans to increase its exposure to enterprise customers will also be in focus. On Tuesday, virtualization software maker VMware Inc is likely to report a third-quarter profit above estimates, according to StarMine, helped by new license sales and contract renewals. Pressure is building on the company's parent EMC Corp from activist investor Elliott Management to spin off VMware as other technology companies have been spinning off operations in an attempt to become more agile and capitalize on faster-growing businesses. Investors will look forward to management commentary on spin-off prospects and growth outlook. Video conferencing equipment maker Polycom Inc is expected to report third-quarter results largely in line with analysts' expectations on Wednesday, according to StarMine. Polycom has been cutting costs aimed at operating margin improvement that will help it better compete against larger rivals such as Cisco and Google. On Wednesday, ServiceNow Inc, which makes software to automate and manage IT services, is expected to beat profit estimates during the third quarter, according to StarMine. JMP Securities analysts say the company is expected to benefit due to an improved spending environment and that its products are winning market share from rivals such as BMC Software. Investors will look for commentary on fourth-quarter and 2015 outlook. Fortinet Inc's third-quarter profit is expected to beat analysts' estimates on Wednesday, according to StarMine. Analysts say the company is benefiting from stronger demand for its high-end products, particularly in Europe, as the frequency and sophistication of cyber-attacks increase. Network equipment maker Riverbed Technology is expected to report third-quarter results below analysts' average estimate on Thursday, according to StarMine. Riverbed estimated lower-than-expected revenue for the third quarter due to weakness in its core wide area network optimization business. It also said this month that it would review strategic options and launched a cost-cutting program, after activist investor Elliott Management reaffirmed its offer to buy the company. On Thursday, touchscreen-chip maker Synaptics Inc is likely to report first-quarter revenue slightly below analysts' average estimate, according to StarMine. Synaptics' results are likely to be impacted by the broad-based slow down in markets, including autos and network equipment, in regions ranging from Asia to Europe. However, the company could buck the trend as its fingerprint identification technology is being increasingly used in smartphones. Dunkin' Brands is scheduled to report third-quarter results on Thursday. Its Dunkin Donuts chain is battling intense domestic competition from the likes of McDonald's as well as higher milk prices in its international Baskin-Robbins ice cream business. The company cut its 2014 forecast in July. Angie's List Inc, which operates a website that allows users to review local businesses, is expected to post a smaller-than-expected third-quarter loss on Wednesday, according to StarMine. The company, which is yet to post a profit, is expected to benefit from revenue from advertising contracts and fees from e-commerce transactions. Athletic apparel maker Under Armour is expected to post another quarterly profit on Thursday as the company gains market share in Europe, and demand grows for its running shoes, and women and kids' athletic apparel. Analysts expect the company to forecast sales growth of between 20 to 25 percent in 2015. Apollo Education Group Inc, the owner of the University of Phoenix, releases fourth-quarter results on Tuesday. The service company was able to slow a decline in enrollments two quarters ago as its efforts of freezing tuition fees and launching new programs began to pay off. The company plans to roll out more than 45 certificate programs this year in business, education, IT and healthcare. Apollo, which gets about one-eighth of its revenue from outside the United States, has also been trying to boost its global presence through acquisitions. Investors will be keen to see further improvements in Apollo's enrollments and will be looking for more information about the company's industry forecast for next year. E-cigarette maker Electronic Cigarettes International Group's IPO is expected to raise about $139.3 million, valuing the company at up to $575 million. The company, which counts Wal-Mart and Walgreens among its customers, owns brands such as Vapestick, Victoria and El Rey. The company posted sales of $48.5 million and a loss of$7.7 million for the six months ended June 30. The release of the Bank of Canada's monetary policy statement on Wednesday will be the main economic event in Canada next week. The central bank will also be updating its economic forecasts and is widely expected to hold interest rates at 1 percent, where they have been for the last four years. Analysts expect the bank will likely stick to its cautious stance and the statement will be parsed for any insight into the outlook for the global economy or concerns about the recent volatility in financial markets. Investors will also take in a separate report on retail sales for August next week. On Wednesday, Mexico's retail sales data will show how consumer spending fared in August after rising in July and wobbling this year thanks to a tax hike. Inflation data for the first half of October due on Thursday will reveal whether price increases remained above the central bank's 4 percent ceiling after notching a seven-month high of 4.22 percent in September. On Friday, data will show whether economic activity continued to expand in August after growing 0.41 percent on a monthly basis in July. MONDAY, OCTOBER 20 Apple Inc, which derives the majority of its business from its high-end mobile devices, is scheduled to release fourth-quarter results after the bell. Halliburton Co, the world's No.2 oilfield services provider, is expected to report a higher third-quarter profit, helped by stronger drilling activity and demand for production services in North America. The company is also expected to benefit from a recovery in the pressure pumping market. Investors will be looking to see if the company will be hurt by weak oil prices. Wall Street will be looking for more signs of weak demand for semiconductors when Texas Instruments posts its third-quarter results. Investors are on edge after Microchip last week warned it saw signs of a broad correction in chip demand. Texas Instruments, a leader in chips used for cars, industry and commercial devices should give new evidence of the state of the industry. Federal Reserve Board Governor Jerome Powell participates in the "Fed Perspectives on Community Banking" webinar and conference call hosted by the Federal Reserve Bank of St. Louis (1000/1400). Novo Nordisk, the world's top insulin maker, is slated to receive an FDA decision on whether its diabetes drug, known generically as liraglutide, will be approved to treat obesity. If approved, the drug will compete with Vivus' Qsymia, Arena's Belviq and Orexigen's Contrave, all relatively recently approved diet drugs in the United States. Second-largest U.S. toymaker Hasbro Inc will report third-quarter results before the bell. While sales of its games and preschool products have fallen for the past two quarters, Hasbro expects games including My Monopoly, Simon Swipe and Battle Masters featuring "Transformers" and Marvel Comics characters to boost sales in the holiday season. Analysts expect sales to remain tepid in the quarter despite higher sales of My Little Pony and boys' toys under Transformers and Spider-Man. Investors will be looking for comments on plans for the holiday season. Coal miner Peabody Energy Corp is expected to report a bigger loss in the third quarter, hurt by depressed prices for coal. The company cut its third-quarter adjusted profit forecast last month, citing tax expenses related to its Australian mines. The company has been hit by higher mining costs and a slowdown in the Chinese steel market. The Chinese government has also levied tariffs on coal imports, further hurting Peabody's margins. Investors will be looking for details on the impact of the tariff, and updates to previously announced bottlenecks in shipping coal by rail in the United States. Dow 30 component International Business Machines Corp is slated to post third-quarter earnings after the bell. The world's biggest technology services company has been struggling to revive growth as it shifts focus to high-end products such as cloud and big data. Investors will look for improvements in the company's software sector, which is expected to make up half of the company's profits by 2015, but saw slow growth last quarter. Chipotle Mexican Grill Inc reports third-quarter earnings after the bell. The Denver-based company is the top-performing publicly traded restaurant chain and faces the tricky task of having to raise prices to offset higher food costs. Canada's Valeant Pharmaceuticals International Inc reports third-quarter results. These are seen as pivotal to its efforts with activist investor Bill Ackman to remove most Allergan directors in a special shareholder meeting scheduled for Dec. 18, as part of Valeant's hostile takeover bid. The results are expected to make the company's performance clearer, since there is unlikely to be the usual number of restructuring and other one-time charges connected with acquisitions to obscure the bottom line, a key area of criticism by Allergan. Statistics Canada announces August wholesale trade data. Analysts predict wholesale trade to decline by 0.2 percent (0830/1230). (All analysts' estimates are according to Thomson Reuters I/B/E/S) (Compiled by Ayesha Sruti Ahmed in Bangalore; Editing by Simon Jennings)
© Thomson Reuters 2016 All rights reserved.