What to Watch in The Week Ahead and on Monday, May 19
(The Day Ahead is an email and PDF publication that includes the day's major stories and events, analyses and other features. To receive The Day Ahead, Eikon users can register at . Thomson One users can register at RT/DAY/US. All times in ET/GMT) WEEK AHEAD The highlight of the week is the release on Wednesday of minutes of the Federal Reserve's April policy meeting. Although the meeting's policy decision was exactly as expected, the account of the meeting could reveal detail on how officials plan to revise their "exit strategy" for shrinking the Fed's $4.3-trillion balance sheet down to size over coming years. They may also have discussed exactly what economic conditions would warrant finally lifting rates from near zero, which is expected some time next year. Fed Chair Janet Yellen also gives a commencement speech in New York on Wednesday, one of a handful of speeches from policymakers throughout the week. The U.S. Senate, meanwhile, is expected to hold a preliminary vote on Stanley Fischer's nomination to be the Fed's vice chair on Tuesday, with a vote on final approval expected on Wednesday. Housing data next week is expected to show a pickup in sales in April. The National Association of Realtors is expected to report on Thursday that existing home sales rose to a 4.69-million unit pace. On Friday, the Commerce Department is expected to report that new home sales increased to a 425,000-unit pace. Other data next week include weekly jobless claims, which covers the survey period for May nonfarm payrolls. With U.S. retailers from Wal-Mart to Macy's blaming the protracted cold weather for weak sales, all eyes will be on Home Depot's sales when it reports first-quarter results before the bell on Tuesday. The home improvement chain had forecast a strong spring selling season as consumers were likely to spend on repairs following the winter storms but it seems likely that the bad weather in February and March continued to keep shoppers away from its stores. Investors and analysts will also be looking out for management's comments and outlook on the state of the U.S. housing market, particularly as the recovery appears to be faltering. PC maker Hewlett Packard is still trying to keep things on an even keel as personal computer demand crumbles and spending by corporations and government agencies on computing remains shaky. When the company reports results after the bell on Wednesday, Wall Street will expect to see slight but discernible improvement in efforts to curtail its revenue decline and protect margins, given Cisco's better-than-expected performance last quarter and IBM's somewhat positive outlook. Home improvement retailer Lowe's was one of the few retailers to benefit from the extreme cold weather that plagued the fourth quarter as shoppers snapped up heaters, snow blowers and fittings to fix broken pipes among other items. This benefit is likely to have continued into the first quarter due to the persistent cold weather in February and March. When the company reports first-quarter results before the market opens on Wednesday, investors will be eager to see whether the company was able to further narrow the gap with market leader Home Depot and will also be looking out for any updates on Lowe's outlook for the year. Gap Inc is scheduled to report fiscal first-quarter results on Thursday and investors will be looking for signs of revival in apparel sales. The retailer, whose sales last month benefited from a warmer April, has estimated quarterly profit above Wall Street expectations. TJX Companies, the owner of the T.J. Maxx and Marshalls chains, is scheduled to report first-quarter results before the bell on Tuesday. Investors will look for signs if the company is continuing to gain customers at the cost of larger peers. The bargain store operator has said it expects comparable-store sales growth of 1-2 percent and earnings in the range of 65 cents to 66 cents per share, below the average analyst estimate of 67 cents. Intuit has said it expected a strong third-quarter performance due to demand for its online tax-preparation software, TurboTax, in the U.S. tax-filing season. The company's results, scheduled for release after the bell on Tuesday, are expected to benefit from the growing do-it-yourself software category. Intuit raised its forecast for full-year consumer tax revenue growth to 6 percent from previous expectation of 4-5 percent. Target fired its CEO, Gregg Steinhafel, earlier this month following a massive data breach during the holiday season and botching its Canadian expansion, which led to significant damage to its reputation and hit sales. All eyes are now on CFO-turned-CEO John Mulligan to fix Target's Canadian operations and get back U.S. customers spooked by the payment card breach. Analysts caution its first-quarter results, expected before the markets open on Wednesday, could be hampered by the colder-than-usual winter in the U.S. just like Wal-Mart. Tiffany is expected to report first-quarter results on Wednesday amid signs that sales in its U.S. home market is finally starting to show improvement. Investors will be keen to know if the company can keep up the momentum and will look for updates on sales of silver jewelry and items priced below $500, which it has been struggling to boost, and for additional increases to its $300 million share repurchase program. On Thursday when electronics retailer Best Buy reports first-quarter results, investors expect an update on its turnaround efforts, which CEO Hubert Joly has spearheaded with success so far. The company has cut jobs, shut unprofitable stores and stripped away layers of management, leading to three straight quarters of profitable growth. Analysts expect further cost cuts and improved marketing initiatives to better compete with Amazon, and hope Joly will throw more light on such efforts. Chipmaker Marvell Technology is expected to report first-quarter results above the analysts' average estimate after the bell on Thursday, according to Starmine, helped by a pickup in its mobile business. Asset manager Eaton Vance's results, scheduled for Wednesday, are expected to be in line with estimates, according to Starmine data. Analysts would be looking at the performance of its equity funds, which have witnessed outflows in recent times, despite the rising stock market. GameStop's results are likely to be in line with estimates, according to Starmine data, when it reports on Thursday. The company has been exploring revenue options to counter sagging video game software sales and competition from new players such as Wal-Mart. Struggling teen apparel retailer American Eagle Outfitters, which has been hurt by choppy sales trends at malls, is scheduled to announce its first-quarter results on Wednesday. The retailer forecast first-quarter earnings below the average analyst estimate as intense competition from fast-fashion chains keeps shoppers away. Adverse winter weather reduced earnings by 3 cents per share in the quarter, the company has estimated. Bristow Group, which provides helicopter services to the offshore energy industry, is expected to report a higher quarterly profit after the bell on Wednesday, driven by a higher number of orders. Investors expect demand for helicopters to soar in the coming quarters. Among IPOs scheduled for the week are SunEdison Semiconductor and JD.com on Thursday and Parsley Energy on Friday. SunEdison's initial public offering is expected to raise about $108 million, valuing it at up to $605.4 million, while China's No.2 internet retailer, JD.com, is expected to raise up to $1.70 billion. Investors are expected to keep a keen eye on the IPO of JD.com for clues ahead of Alibaba's monster offering later this year. Parsley Energy's IPO is expected to raise about $655.2 million, valuing the company at up to $1.4 billion at the top end of the expected price range of $15-$18 per share. Canada's report on the consumer price index will be the economic event of the week, with investors likely to scrutinize the numbers for what they might mean for monetary policy. The annualized inflation rate is expected to pick up to 2 percent in April, while the less volatile core measure is expected to edge up to 1.4 percent. The Bank of Canada has flagged its concern about the weak inflation environment as it maintains a neutral policy stance. Other major economic reports next week will be wholesale trade and retail sales, which are both expected to see cooler growth in March. MONDAY, MAY 19 Teen apparel retailer Urban Outfitters faced a tough holiday season as heavy discounting eroded margins. The company is expected to report first-quarter results amid a shift by its customers to fast-fashion retailers such as Zara and H&M. Investors will want to know measures the company is taking to curb margin pressure and update its merchandise. (Compiled By Ayesha Sruti Ahmed in Bangalore)
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