*BUSY WEEK AHEAD... ARE YOU READY!!!???... I can't wait personally ;)
Wall Street Eagerly Awaits Earnings Season Sunday October 16, 9:38 pm ET By Michael J. Martinez, AP Business Writer Earnings Season Can't Come Fast Enough for Wall Street; 12 of the 30 Dow Industrials to Report
NEW YORK (AP) -- Wall Street is hoping that this week's cascade of corporate earnings reports will help the markets overcome an October scare prompted by increasing concerns that economic growth could skid to a halt.
Investors are still worried that the economy may not be able to sustain itself if high gasoline and heating costs prompt consumers to spend less just as companies opt to raise prices to cover their own rising costs.
It's all but certain that the consumer will indeed have to cut back somewhat or else fall deeper into debt, and energy prices aren't likely to fall substantially in the near future. So it falls to America's corporations to reassure Wall Street with third-quarter earnings reports and, more importantly, their forecasts for the fourth quarter and 2006.
So far, the news is promising. Dow Jones industrials Alcoa Inc. and General Electric Co. saw strong earnings and decent forecasts, and retail sales reports for September were surprisingly good given the economic environment.
But it will take a lot of good news to dig stocks out of their slump, though strong gains Friday mitigated last week's losses. For the week, the Dow fell 0.05 percent, the Standard & Poor's 500 index lost 0.78 percent and the Nasdaq composite index dropped 1.22 percent.
One can make the argument that stocks are oversold after two weeks of declines, and that Wall Street could be in a mood to buy on positive news. However, investors have been quick to punish stocks for underperforming, and remain nervous about inflation, rising interest rates and consumer spending.
ECONOMIC DATA
Those inflation fears could lessen Tuesday after the Labor Department issues its producer price index for September. The PPI, which measures price increases on the wholesale level, could come in lower than expected after a better-than-expected showing Friday from the Consumer Price Index. The PPI for September is expected to show a 1.1 percent increase in wholesale prices, up from a 0.6 percent hike the previous month.
So-called "core" PPI, with food and energy prices removed, is expected to rise just 0.2 percent for September after a flat August. Investors know overall prices have risen due to energy costs -- it's the core number which will move the market.
The Federal Reserve's "Beige Book," a detailed regional assessment of the nation's economy, is due Wednesday afternoon during the trading session. Investors will look to this release for details on the economic disruption wrought by Hurricanes Katrina and Rita as well as signs of inflation hitting particular markets.
EARNINGS
The first full week of earnings is typically the busiest, and this week is no exception, with 12 of the 30 Dow industrials due to report: Altria Group Inc., Caterpillar Inc., Citigroup, Coca-Cola Co., General Motors Corp., IBM Corp., Intel Corp., JPMorgan Chase & Co., Johnson & Johnson, Pfizer Inc., SBC Communications Inc. and United Technologies Corp. Naturally, any one of these major corporations has the potential to move its sector, if not the whole market.
Among other notable companies, Wall Street will keep a watchful eye on United Parcel Service Inc.'s earnings, out Thursday morning, to see how high fuel costs have affected it. UPS has struggled this year, off 21.4 percent from its 52-week high of $89.11 on Dec. 10, 2004. The shipping company is expected to earn 85 cents per share, compared to 70 cents per share last year. UPS closed Friday at $70.01.
Investors also look to Wall Street's earnings for help in divining the market, which will make Merrill Lynch & Co. of interest when it reports Tuesday morning. The brokerage is expected to earn $1.19 per share, up from 93 cents per share in the year-ago quarter. Merrill's stock has had a volatile year, but is up 17.8 percent from its 52-week low of $50.93 on Oct. 20, 2004, closing Friday at $59.98.
EVENTS
Federal Reserve Chairman Alan Greenspan will open a week of speeches from top Fed officials with a talk Monday in Tokyo. That will be followed by five other rate-setting committee members speaking later Monday, Tuesday, Wednesday and Friday. While Wall Street is quite certain the Fed will continue raising rates, the speeches will be thoroughly parsed for any signal of the Fed's future intentions, and any one of the Fed speakers could move stocks with a particularly bullish or bearish statement.
The Fed is due to make its next decision on interest rates Nov. 1.
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