What to Watch in the Week Ahead and on Monday, July 20

Fri Jul 17, 2015 4:04pm 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) WEEK AHEAD

With the situation in Greece now a little more stable, markets will switch focus to earnings next week, with bellwethers including IBM, Apple and Microsoft headlining a big week for results and 126 S&P 500 companies set to report. The equity market has been riding high, led by tech names, and could rise further on the back of a strong set of earnings reports from the big tech companies. The dollar should be supported by expectations for firmer rate policy, compared with the euro zone and Japan.

Apple Inc posts third-quarter results on Tuesday. The iPhone maker is expected to report revenue and profit above estimates, according to Thomson Reuters StarMine, helped by strong sales of its flagship phone. Apple sold 61.2 million iPhones in the second quarter. Investors will look for data on how the Apple Watch performed, after a report this week by research firm Slice Intelligence showed that its sales have dropped since it was launched in April.

On Tuesday, Microsoft Corp is expected to report fourth-quarter profit and revenue slightly below analyst expectations, according to StarMine. The company has been stepping up efforts to arrest falling sales in its core Windows business and shifting focus to cloud-related offerings such as its online Office 365 suite of applications. A strong dollar is also expected to weigh on its results.

Investors will focus next week on home sales data and home price index numbers. Financial data firm Markit will release its preliminary Manufacturing Purchasing Managers' Index on Friday. New U.S. home sales data, also due Friday, is expected show a 0.1 percent fall to a seasonally adjusted annual rate of 545,000 units. Data on home resales, due on Wednesday, is likely to show a 0.9 percent increase to an annual rate of 5.40 million units, compared with the previous month's 5-1/2-year high figure. The National Association of Realtors showed existing home sales increased 5.1 percent to an annual rate of 5.35 million units in May. Data for the home price index is due on Wednesday, along with the numbers for the index of mortgage application activity from the Mortgage Bankers Association.

American Express Co, the world's biggest credit card issuer, posts second-quarter results on Wednesday, expected to be in-line with analysts' estimates, according to StarMine. AmEx's CEO indicated in March that the company might cut jobs to improve margins and achieve previously set targets, as it faces cutthroat competition from Visa and Mastercard. On Thursday, Visa Inc, the world's largest credit and debit card company, reports third-quarter earnings, and is expected to have been helped by higher U.S. consumer spending boosted by lower gasoline prices and a strong labor market.

Verizon Communications Inc, the biggest U.S. wireless service provider, will report second-quarter earnings on Tuesday, as it gears up to launch its online video service and make a push into mobile video and targeted advertising to unlock new revenue streams. Investors will keep an eye out for its capital expenditure range amid intense competition in the wireless industry and for details on how its $4.4 billion purchase of AOL Inc in June will impact its bottomline. On Thursday, AT&T Inc posts second-quarter results. Investors will keep an eye out for any impact of intensified telecom industry competition on margins and the effect of the DirecTV merger on earnings.

E-commerce company Amazon.com Inc is expected to report second-quarter revenue marginally above estimates, according to StarMine, helped by growth in Amazon Web Services and sales in North America. The company broke out financial details of its cloud computing unit, a $5 billion business, for the first time last quarter. Amazon is expected to continue to report a loss, as it invests in products and services that range from Hollywood-style television productions to drone delivery and streaming video-calls.

The world's largest beverage maker, Coca Cola Co, is likely to report second-quarter revenue above analysts average estimate on Wednesday, according to StarMine. Coke has called 2015 a transition year as it attempts to figure out how to increase soda sales.   Continued...