While the first week of 2011 showed market gains, thereby reinforcing the air of cautious optimism, the coming week is likely to present a challenge to US stock market investors as 2010 fourth quarter results start trickling in. With much of the improvement in profits registered by noteworthy companies during last year being attributed to cost cutting exercises, investors and stakeholders are looking for genuine revenue growth in the upcoming year. How companies ended 2010 should give a good indication as to whether these expectations will be met.
In keeping with tradition, Dow component Alcoa will kick off the release of 2010 fourth quarter results, closely followed by Dow components Intel and JP Morgan Chase. Standard & Poor’s 500 components Apollo Group and Lennar are also due to reveal their results. A year ago, profits reported in fourth quarter results provided some light at the end of the tunnel, following nine quarters in succession showing losses. After a tumultuous year where ‘double dip’ talk caused consternation, investors are looking forward to improved performance and slow but steady economic recovery. Results are a good indicator as to whether the management team of a company is making headway in these difficult times, but investors look to the future and so, along with 2010 fourth quarter results, companies will be expected to provide insight into future plans and expected performance.
The coming week starts off fairly slowly from an economic news perspective. Monday sees both Alcoa and Apollo Group releasing results after closing bell. Tuesday’s market activity includes the Commerce Department’s wholesale inventories report and quarterly earnings from Lennar before opening bell. Wednesday is marked by the release of the Federal Reserve’s Beige Book indicating economic activity for the 12 districts under the Fed’s jurisdiction.
Thursday sees the release of the Department of Labor’s report on weekly jobless claims with the expectation that last week’s figure will have climbed to 420,000 as compared to 409,000 recorded the week before. On the other hand, continuous claims are expected to have fallen from 4.1 million to 4.07 million. Other activity includes the Commerce Department’s PPI and core-PPI, as well as the trade balance. Intel will release its fourth quarter results after closing bell on Thursday. Friday is a busy day with JP Morgan Chase releasing results before the start of trade, and the Commerce Department releasing the CPI, as well as reporting on retail sales before start of trade. Also on Friday, the Fed reports on manufacturing activity, and the University of Michigan presents its consumer sentiment index for the current month.
