Nov. 5, 2011, 12:01 a.m. EDT
Europe to command U.S. market attention
China inflation data, U.S. sentiment, Cisco and Disney earnings
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By Wallace Witkowski, MarketWatch
SAN FRANCISCO (MarketWatch) — European sovereign debt developments are expected to command investor attention next week as earnings season draws to a close and a light offering of economic data is served up.
Analysts project the coming week to be considerably less dramatic compared to the past week, when Greek Prime Minister George Papandreou caught markets off guard with plans to hold a national referendum on a European bailout package. The prime minister later scrapped those plans as European leaders questioned whether the country wanted to remain in the euro zone.
Europe's next week: BOE, Greece
The Bank of England will announce its monetary-policy decision on Thursday. Investors will also watch closely developments in Greece and Italy. But the uncertainty was enough to break a string of weekly gains for U.S. stocks. The Dow Jones Industrial Average /quotes/zigman/627449/delayed DJIA -0.51% shed 2% for the week, the S&P 500 Index /quotes/zigman/3870025 SPX -0.63% declined 2.5%, and the Nasdaq Composite Index /quotes/zigman/123127 COMP -0.44% fell 1.9%.
“The patient had a relapse this week and the doctors are hovering in intensive care trying to together to get things back on track,” said Alan Gayle, senior investment strategist for RidgeWorth Investments.
Investors on Monday will react to the latest political developments in Greece. After the close of U.S. trading Friday, Papandreou survived a confidence vote and pledged to seek an interim government that would secure a rescue deal for the debt-burdened country, according to the Associated Press.
Mark Luschini, chief investment strategist at Janney Montgomery Scott LLC, said markets will continue to ebb and flow on news coming out of Europe as details of the Greek bailout emerge.
“Earnings season is beginning to wane, there’s no real huge economic data, we’re not likely to see QE3 next week, so it’s going to be Europe every day,” said Luschini.
Domestic issues won’t likely eclipse those out of Europe until a congressional supercommittee reaches a deadline in late November to produce a plan to cut the U.S. budget deficit, he said.
U.S. next week: Disney, Cisco, Italy
Monday markets will likely react to Greek PM Papandreou's confidence vote slated for after the Friday close. Plus, Italy will likely be a focus next week, Laura Mandaro tells the Markets Hub. Earnings to watch for include Cisco, Disney and Nvidia. Mark Lamkin, chief executive and chief investment strategist at Lamkin Wealth Management, agreed that Europe will dominate the market until the focus returns to the supercommittee. In the meantime, the strategist said he’s put 50% of his portfolios back to work, believing the Papandreou gambit was a hiccup in the European quarantine package.
“Now we begin to focus on the part of the economy that is working,” Lamkin said. “Some believe that a recession in Europe is a given, so we’re focusing on small- to mid-caps.”
Eric Marshall, co-portfolio manager of the Hodges Small Cap Fund, said investors need to take a deep breath and take this earnings season into context, adding that there will be no quick fix to Europe and that the ultimate driver for stock prices is earnings.
“We’ve been distracted with the daily fluctuations in Europe and the bailout,” Marshall said. “All that macro fear has overshadowed corporate earnings.”
Of the 413 companies on the S&P 500 Index that have reported third-quarter results, 73% have posted earnings above consensus estimates, according to John Butters, senior earnings analyst at FactSet Research. That works out to a blended earnings growth rate of 16.4% for the quarter.
Regarding fourth-quarter outlooks, 62 of those companies have issued a negative earnings guidance compared with 25 companies issuing positive earnings guidance, according to Butters.
Earnings ahead
On Monday, Sysco Corp. /quotes/zigman/242525/quotes/nls/syy SYY -0.14% and Priceline.com Inc. /quotes/zigman/90481/quotes/nls/pcln PCLN +0.51% report results. Activision Blizzard Inc. /quotes/zigman/110164/quotes/nls/atvi ATVI +0.30% and Take-Two Interactive Software Inc. /quotes/zigman/62747/quotes/nls/ttwo TTWO -0.05% release results on Tuesday. On Wednesday, Cisco Systems Inc. /quotes/zigman/20039/quotes/nls/csco CSCO +0.89% and Macy’s Inc. /quotes/zigman/467976/quotes/nls/m M -0.35% post their quarterly results. Then, on Thursday, Walt Disney Co. /quotes/zigman/245568/quotes/nls/dis DIS -0.77% and Nvidia Corp. /quotes/zigman/80597/quotes/nls/nvda NVDA +0.27% report results.
On the U.S. economic calendar, September consumer credit data comes out Monday, with foreign trade data from September on Thursday and November consumer sentiment data on Friday.
One closely-watched metric in the coming week will be China’s monthly economic figures, including consumer and producer inflation, industrial output and retails sales on Wednesday.
RidgeWorth’s Gayle said China data will serve as an indicator for global economic momentum.
“China may be taking their foot off the policy break,” Gayle said. “The story this year has been that China is trying to slow growth. They may declare victory and that’s positive for markets.”
Add DJIA to portfolio /quotes/zigman/3870025
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Wallace Witkowski is a MarketWatch news editor in San Francisco.
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RELL327 2 hours ago
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mdmontaigne 1 hour ago
FilthyBeast 1 hour ago
http://www.guardian.co.uk/commentisfree/2011/nov/03/greeks-austerity-grassroots
AmericanPatriot 1 hour ago
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polo007 31 seconds ago
German to referendum to kick Greece out the euro zone
By Gobby Wang
Taiwan News, Staff Writer
2011-11-05 10:22 AM
Greece’s referendum makes the world’s situation is in messy chaos. However, after the leaders of Germany and France turned the screws on Greece, Greece had given up the referendum because Greece doesn’t want to be driven out the Eurozone.
But German would like to hold a referendum to kick Greece out the euro zone according to the headline of a press which has the large volume of circulation. And Greece PM gave up the referendum after this news had published for few hours.
... />Alexander Dobrindt, the general-secretary of the Bavarian Christian Social Union Who supports the issue for referendum in Germany stated, it doesn’t make the sense that Greek refused to work hard with their lives but German need to live in an austerity to rescue them. more