What to Watch in the Week Ahead and on Monday, July 13
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The stock market this quarter doesn't get its usual one-week on-ramp to earnings season, instead getting hit with JPMorgan, Wells Fargo, Intel, Netflix, Google, General Electric Co and Honeywell, all in one week. Add in the political yelling that has become the semi-annual Federal Reserve Chair Janet Yellen's testimony and the ongoing craziness that is Greece's potential exit from the euro zone - to say nothing of China's turmoil - and it should be a lively week for markets, and one that will likely see a lot of volatility. Euro zone finance ministers may make a "major decision" when they hold a special meeting on Saturday to weigh a new Greek proposal for emergency funding. The ministers' conclusions will be reviewed by euro zone leaders at a summit called for on Sunday.
Fed Chair Janet Yellen delivers semi-annual testimony on monetary policy before the House Financial Services Committee in Washington on Wednesday and Thursday. The July hearing has more drama heading into it than the February testimonies. For one, Yellen starts this time with the House, where she ended last time, after trading some testy exchanges with Republican congressmen. This week's congressional appearance also comes as the Fed appears closer to raising interest rates for the first time since 2006. Yellen's appearance comes just a few weeks after the Fed's last Federal Open Market Committee meeting, and two weeks before its next one - so Yellen will be unlikely to drop too many policy hints and changes in this round or testimony, unless she wants to point the market harder to September lift-off.
Dow components Johnson & Johnson, General Electric Co, JP Morgan Chase & Co, Intel Corp, Goldman Sachs Group Inc and UnitedHealth Group Inc are scheduled to report quarterly results in the coming week. Johnson & Johnson is expected to report on Tuesday lower second-quarter sales and earnings as weak revenue from medical devices and consumer products and a stronger dollar more than offset the benefit of surging sales of its newer prescription medicines. The same day, JPMorgan Chase & Co releases second-quarter results. Separately, Goldman Sachs is expected to report lower second-quarter profit on Thursday. Intel Corp is expected to report second-quarter revenue and profit below analysts' expectations on Wednesday, according to Thomson Reuters StarMine. General Electric reports second-quarter earnings on Friday, with Wall Street eyeing updates on the U.S. conglomerate's desired portfolio moves as it seeks to become a more focused industrial company. UnitedHealth Group Inc will report second-quarter earnings on Thursday. The quarter is expected to be a strong one for UnitedHealth, whose technology and pharmacy management business has helped it report regular growth in quarterly operating profit.
Google Inc, the operator of the world's No. 1 Internet search engine, is scheduled to post second-quarter results on Thursday. The company is expected to report quarterly revenue slightly below analysts' estimates, according to Thomson Reuters StarMine data, hurt by the impact of a stronger dollar. Google, which generates about half of its revenue outside the United States, has also faced challenges in mobile advertising and it is investing heavily in new businesses.
Citigroup Inc reports second-quarter results on Thursday. The most international of banks based in the United States is expected to see quarterly profits rebound sharply from a year earlier, when net income was all but obliterated by high legal and restructuring costs. Separately, Wells Fargo & Co will also report second-quarter results on Tuesday. The bank's mortgage banking business is expected to do well during the quarter as more people buy new homes in an improving economy. On Wednesday, Bank of America Corp is expected to report an increase in its second-quarter profit. The bank's results from fixed-income trading are expected to lag those of competitors because it is more heavily weighted toward trading credit instruments such as corporate bonds and it handles relatively fewer interest rate-sensitive government securities, Chief Financial Officer Bruce Thompson warned investors in June.
The U.S. Labor Department releases its Consumer Price Index for June on Friday. The index is expected to have risen at a slower pace than in the previous month. Separately, the department will issue on Wednesday its June producer price index for final demand. On the same day, the Federal Reserve releases data for June industrial output, which is expected to have risen 0.2 percent after falling 0.2 percent in May. Meanwhile, the Commerce Department issues June retail sales data on Tuesday. Economists expect retail sales, which surged 1.2 percent in May, to have risen just 0.3 percent in June. On Friday, the University of Michigan's preliminary reading on its overall index on consumer sentiment for July is expected to come at 96.0 compared with a final reading of 96.1 for the previous month. Also, the Federal Reserve issues its so-called Beige Book on Wednesday.
Federal Reserve Bank of Kansas City President Esther George speaks on economic conditions and monetary policy before the Federal Reserve Bank of Kansas City 2015 Agricultural Symposium in Kansas City, Missouri, on Tuesday. On Wednesday, Federal Reserve Bank of Cleveland President Loretta Mester speaks on the economic outlook and participates in live interview before the Columbus Metropolitan Club Forum in Columbus, Ohio. The same day, the Federal Reserve Bank of San Francisco President John Williams will speak on the economic outlook before the Mesa Chamber of Commerce in Mesa, Arizona and in another event, he will also give a brief summary on the economy before a Greater Phoenix Economic Council panel on economic trends in Phoenix, Arizona. Continued...