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Equities could continue to drift next week as investors watch for a debt-resolving deal between Greece and the EU and wait for Federal Reserve policymakers to emerge from two days of meetings and hold a press conference on Wednesday afternoon. Even a messy Greek deal could produce a rally in equities and some relief for the euro. Traders already have priced in a Fed interest rate hike in September or December; any hints on whether it will move sooner or later could produce ripples in stock, bond and currency markets. In the bond market, longer-dated yields, which hit seven-month highs this week, will likely stay volatile on developments on Greece's debt negotiations to avoid a default, while short-dated yields will fluctuate on signals from the Fed whether it intends on raising interest rates later this year. One thing remains accepted wisdom in the market: the dollar's strengthening trend is unlikely to be significantly undermined.
Federal Open Market Committee (FOMC) begins a two-day meeting on interest rate policy on Tuesday and markets will focus on U.S. Federal Reserve's statement on Wednesday. Meanwhile, the Federal Reserve Bank of Cleveland President Loretta Mester speaks on "Community Development and the Federal Reserve" before the Federal Reserve Banks of Cleveland and Philadelphia Policy Summit in Pittsburgh, Pennsylvania on Friday. Federal Reserve Bank of San Francisco President John Williams gives policy speech before the National Bureau of Economic Research East Asian Seminar on Economics.
On Wednesday, Oracle Corp, the world's leading database company, is expected to report lower revenue and profit for its fourth-quarter as it transitions some of its business to a more investment-heavy cloud-computing model and copes with relatively weak overall technology spending by businesses in an uncertain economy.
The U.S. Commerce Department issues May data for housing starts and building permits on Tuesday. Groundbreaking is expected to have dropped to 1.100 million units from 1.135 million units in April and permits for future home constructions is expected to have fallen to 1.100 million units from 1.140 million units. On Thursday, the Commerce Department issues current account data for the first quarter. Current account gap is expected to increase to $116.8 billion from $113.5 billion deficit in the previous quarter. The Labor Department on Thursday issues May data for Consumer Price Index, which is expected to have increased 0.2 percent, slower than the 0.3 percent pace in the prior month. The department also releases weekly jobless claims data. Federal Reserve Bank of Philadelphia issues Business Outlook Survey for June. Analysts polled the index to have increased to 8.0 from 6.7 in May. Conference Board issues its Leading Economic Index for May.
Package shipping giant FedEx Corp will report fourth-quarter results on Wednesday. The company is considered an economic bellwether, with shipping activity used as a proxy for overall economic activity. While the stock has done well this year, the transportation sector has lagged significantly. Strong results could reverse that trend, though any weakness could suggest that the weakness in transports could spread to the broader market.
On Tuesday, Adobe Systems Inc is expected to report second-quarter profit above estimates, according to Thomson Reuters StarMine. The Photoshop maker has been switching from traditional box licenses to web-based subscriptions for its Creative Cloud software bundle to help attract more predictable recurring revenue. Analysts will be looking at whether the company forecasts a decline is average revenue per user, as Adobe offered more discounts for Creative Cloud, which includes its Photoshop, Illustrator and Flash software.
Red Hat Inc reports first-quarter results on Thursday. The world's largest commercial distributor of the Linux operating system is expected to report revenue marginally above analysts' estimate according to Thomson Reuters StarMine. Red Hat had forecast first-quarter profit in line with analysts' estimates despite warning on a strong dollar hurting its revenue.
On Thursday, Rite Aid Corp, the No. 3 U.S. drugstore chain is expected to post a rise in first-quarter sales, helped by strong prescription sales and is on track to a successful turnaround. The company has been remodelling stores, and has struck a renewed agreement with McKesson Corp for sourcing and distribution. Analysts say Rite Aid's recent acquisition of EnvisionRx will help its expansion plan. Furthermore, Rite Aid is an attractive target company for bigger players Walgreens and CVS Corp. Investors will be keen on any comments on mergers and full- year forecast.
On Thursday, Kroger Co, the operator of Harris Teeter and Ralphs supermarket chains, is likely to report first-quarter profit and sales above analysts average estimate, according to Thomson Reuters StarMine. Kroger cut prices on natural and organic goods in the quarter in certain markets which have traditionally shown less demand for such goods. It also cut prices on milk. Investor will look at whether the price cuts helped move the needle for sales in the quarter.
Darden Restaurants Inc reports fourth-quarter results on Friday. The Olive Garden restaurant chain owner is expected to report fourth-quarter profit and sales largely in line with market estimates, according to Thomson Reuters StarMine. Investors will be looking for fiscal 2016 forecasts and further details on the company's property deals. Darden had mentioned in its last quarter that it was looking to create value from real estate after traffic at its flagship Olive Garden chain continued to fall. The company had also announced new cost saving initiatives for Fiscal 2016, and are expected to provide more details on the same.
Fitbit Inc, the wearable fitness tracking device maker's initial public offering on Thursday is expected to raise as much as $478 million, valuing the company at up to $3.28 billion. Fitbit makes both wrist bands and clippable devices that monitor a user's fitness activity by tracking the calories burned or distance covered, among other things. Fitbit faces stiff competition from fitness-device makers such as Garmin, Jawbone, Misfit, but its biggest challenger could be Apple's recently launched Apple Watch, which has a host of health-related features and apps. The company's revenue almost tripled to $745.4 million in 2014 and it posted a profit of $131.8 million.
Fitness software firm maker Mindbody Inc's initial public offering on Friday is expected to raise as much as $107.2 million, valuing the company at up to $587 million. Mindbody makes business management software for wellness and fitness boutiques and has since expanded to spas and beauty salons. Customers pay a monthly fee to use the software, which serves more than 42,000 local business subscribers in 124 countries and territories. Mindbody's revenue rose about 44 percent to $70 million for 2014.
Statistics Canada will release inflation data for May on Friday, which is expected to have advanced 0.5 percent after a 0.1 percent drop in April. On the same day, retails sales data for April is expected to show a fall of 0.5 percent against the 0.7 percent rise in March. On Wednesday, Statistics Canada is scheduled to release April data for wholesale trade.
On Tuesday, Brazil's statistics agency IBGE releases April data for retails sales. Retail sales in Brazil tumbled for a second straight month in March as a spike in consumer prices and rising unemployment put shoppers on edge. On Thursday, Central bank of Mexico will publish the minutes of its June policy meeting.
MONDAY, June 15
U.S. Federal Reserve issues May industrial production data, which is expected to have jumped 0.3 percent, against a drop of 0.3 percent in April. (0915/1315) The New York Fed releases its Empire State general business conditions index for June. (0830/1230) In another report, the NAHB/Wells Fargo Housing Market index for June is expected to show a rise to 56 from 54 in May. (1000/1400) Also, the Treasury Department releases a report on Treasury international capital for April. (1600/2000)
Statistics Canada releases manufacturing sales data, which is expected to have dropped 1.0 percent in April from the previous month. It rebounded by 2.9 percent in March from February. (0830/1230) Canadian Real Estate Association, the industry group for real estate agents, will release existing home sales data for May.
Brazil's central bank releases results of a weekly economic survey with more than 100 financial institutions. This will include forecasts for GDP, interest rates and inflation rates. Separately, Peru's state statistics agency Inei releases gross domestic product data for April. (1100/1500)
LIVECHAT- STRATEGY: What to expect from the FOMC with Wells Fargo Advantage Funds Strategist Brian Jacobsen The June FOMC meeting on Wednesday may not produce a rate move, but that doesn't mean markets aren't watching closely for signs of a countdown to liftoff. Join Brian Jacobsen in the Global Markets Forum for a chat about the Fed and other major macro data due out over the course of the week, including housing starts on Tuesday and inflation data on Thursday. To find out more about the forum, click here, bit.ly/1kTxdKD (Compiled by Nivedita Balu; Edited by Don Sebastian)