What to Watch in the Day Ahead - Thursday, July 16

Wed Jul 15, 2015 2:38pm EDT
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(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) Google Inc, the world's No. 1 Internet search engine, is expected to report second-quarter revenue marginally below estimates, according to Thomson Reuters StarMine, due to the impact of a strong dollar. Google, which generates about half its revenue overseas, has also faced challenges in mobile advertising and is running up expenses as it invests in new businesses.

Dow component Goldman Sachs Group Inc reports earnings for the second-quarter. A few analysts have grown bearish on Goldman this quarter, arguing that bond trading revenue will not be as strong as in the first-quarter, and other businesses cannot pick up the slack. But Goldman has surprised Wall Street more than a few times in recent years by slashing expenses or posting unexpectedly strong revenue in other businesses, such as investing and lending. Overall, analysts expect a profit of $3.89 per share, down from $4.10 a year earlier. Separately, Citigroup Inc is expected to see second-quarter profits rebound sharply from a year earlier, when net income was all but obliterated by high legal and restructuring costs. Company executives could face questions about their ability to grow revenue while executing strategies to cut costs and return capital to shareholders.

Federal Reserve Chair Janet Yellen participates on the second day of semi-annual testimony on monetary policy before the Senate Banking Committee in Washington. The testimony comes a day after her appearance in front of the House of Representatives. Most of the questions will likely focus on economic inequality and a financial regulation reform bill approved by the Senate Banking committee that takes aim at the Fed. Yellen resisted calls on the first day for more Congressional oversight and intervention into the U.S. central bank, as members of a House of Representatives panel criticized her and other policymakers for not being accountable enough. She also said turmoil abroad was unlikely to affect the U.S. economy and that the Fed was on track to raise interest rates this year.

UnitedHealth Group Inc, a Dow component and the nation's largest health insurer, is expected to report strong second-quarter earnings, helped by its technology and pharmacy management business. Investors will watch for comments from the company on media reports that it is considering bids for smaller competitors Humana or Cigna. Earlier this year, UnitedHealth announced a $13 billion acquisition of pharmacy benefit manager Catamaran, which some investors have said is keeping it on the sidelines during the current flurry of deals.

The U.S. Labor Department issues weekly jobless claims data. Initial claims for state unemployment benefits are likely to fall 12,000 to a seasonally adjusted 285,000. (0830/1230) In another report, the NAHB/Wells Fargo Housing Market index is likely to rise to 60 in July from 59 the previous month. (1000/1400) Meanwhile, the Philadelphia Federal Reserve Bank's business activity index for July is expected to drop to 12.0 from 15.2 in June. (1000/1400)

Schlumberger Ltd, the world's No.1 oilfield services provider, is expected to report a fall in second-quarter profit as lower oil prices weigh on global drilling activity. Schlumberger, which has cut 20,000 jobs this year, has moved to swiftly control costs to maintain margins in a weak commodity market. With oil prices staying around $50 per barrel, a handful of optimistic shale producers are looking to deploy more rigs. The question being asked by analysts and investors is whether this rise in activity is enough to boost margins at oilfield services companies. Investors will also look for comments on pricing, and expectations for industry spending in the second half of the year. Another topic of interest this quarter is the company's pending deal with Russia's Eurasia Drilling.

E-commerce company eBay Inc is expected to report second-quarter revenue below expectations, according to some analysts. Revenue from the company's marketplace business, which includes its e-commerce platform ebay.com, fell last quarter due to increasing competition from rivals such as Amazon.com and changes in Google's search algorithms. EBay is also set to separate its highly profitable payments business Paypal this month. Investors will look for signs of a turnaround at the company's marketplace business. They will also look for commentary on the post-spin off valuation of the marketplace business.

Analysts expect Charles Schwab Corp's second-quarter earnings to rise to 24 cents per share from 23 cents last year, boosted by clients paying higher fees for advisory accounts and slightly higher trading commissions. But the big revenue bonus that Schwab expects from investing cash in its clients account once rates go up remains evasive, amid signs that the Federal Reserve may again delay rate hikes.

Blackstone Group LP, the world's largest alternative asset manager, reports second-quarter results. Blackstone and Carlyle are making a joint bid for NCR Corp, in a leveraged buyout that could become the year's biggest at more than $10 billion, including debt, people familiar with the matter said in June.   Continued...