What to Watch in the Week Ahead and on Monday, May 11
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The bond markets will continue to adjust to the wild swings in European sovereign debt markets, and the coming quarterly refunding auctions of three-, 10- and 30-year Treasuries could also pressure bond yields in what is a relatively quiet week in terms of economic data and as the earnings calendar winds down. The S&P 500, meanwhile, is just a shade off of its all-time high with a number of retailers reporting results. After the jobs report showed strong hiring but weak wage growth, the expectation that the Fed will take a slow-go-it approach in boosting rates should help equities and continue the outperformance of three-to-seven-year bonds.
Network equipment maker Cisco Systems Inc is expected to report on Wednesday a rise in third-quarter revenue and profit, according to analysts' average estimates. Strong demand for switching equipment and routers is expected to have offset weak spending by the company's traditional telecom customers.
Department store operator Macy's Inc warned in February that sales and margins in the first quarter would be hurt by disruptions at U.S. West Coast ports. The company, which is entering the off-price business, has said the first four pilot off-price stores will open in the fall in New York city. Investors will look out on Wednesday for details of the company's plan for growing the new business. On the same day, department store operator J.C. Penney Co's first-quarter sales are expected to miss estimate, according to Thomson Reuters StarMine data. Department store operator Kohl's Corp on Thursday is expected to report a first-quarter profit that will likely beat the analysts' average estimate, according to Thomson Reuters StarMine. Same-store sales are expected to grow, helped by the nationwide rollout of its loyalty program, upgraded beauty departments at its stores and more online and TV advertising. Investors will watch out for any reaction or comments on Macy's entry into off-price retail.
The U.S. Treasury Department releases the budget statement for April on Tuesday. The Labor Department releases import and export data for April on Wednesday. Import prices are expected to have risen 0.3 percent in April after dropping 0.3 percent in March. Export prices are expected to have remained unchanged at 0.1 percent. On the same day, the Commerce Department is expected to report that retail sales rose 0.2 percent in April after increasing 0.9 percent in March. The Labor Department releases its producer price index data for April on Thursday. On Friday, the Federal Reserve Board releases its report of industrial production and capacity utilization for April. The data is expected to show industrial production increased 0.1 percent last month, after falling 0.6 percent in March.
Boeing Co holds its annual investor conference on Tuesday. Company executives will talk to analysts and investors at its Chicago headquarters, starting at 1000 ET (1400 GMT). On the agenda are presentations by CEO Jim McNerney, COO Dennis Muilenburg, CFO Greg Smith, Airplane CEO Ray Conner and Defense CEO Chris Chadwick.
On Friday, Brazil's state-run Petroleo Brasileiro SA will likely report a sharp drop in profit in the first quarter after falling oil prices erased gains that came from lower cost fuel imports. A weaker Brazilian real against the U.S. dollar also drove up debt costs in local currency terms. A preliminary Reuters survey of analysts suggests profit will fall by more than 50 percent to 2.48 billion reals.
Chip gear-maker Applied Materials Inc is expected to post on Thursday a second-quarter profit slightly ahead of Wall Street's expectations, according to Thomson Reuters StarMine data. Applied Materials is expected to benefit from a pick up in demand after antitrust concerns forced the company to scrap its bid for Japanese rival Tokyo Electron last month. Investors will be looking for management commentary on the company's plans for the rest of 2015.
Symantec Corp, the maker of Norton antivirus software, is expected to report fourth-quarter results above analysts' average estimates on Thursday, according to Thomson Reuters StarMine data. Symantec has been benefiting as governments and companies boost spending to protect their networks from increasingly sophisticated cyber attacks. The company has been seeking buyers for its storage business, Veritas, or the entire company, for several months, sources familiar told Reuters last month. Investors will look for comments on that and outlook for 2016. Continued...